What changed in this filing

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Item 9A. Controls and Procedures

2023-05-26 compared with 2022-05-17 · 689 added, 427 removed, 1178 unchanged (49% of the section changed)

1 unchanged sentence

Definition and Limitations of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

our reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

9 unchanged sentences

Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of March 31, 2023.

In accordance with SEC guidance, our management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Nordeus, which we acquired in June 2021 and is included in the March 31, 2022 Consolidated Financial Statements and constituted 5.6% of consolidated total assets as of March 31, 2022.

In accordance with SEC guidance, our management's assessment of the effectiveness of internal control over financial reporting did not include the internal controls of Popcore, which we acquired in November 2022 and is included in the March 31, 2023 Consolidated Financial Statements.

The acquired business constituted 1.7% of consolidated total assets as of March 31, 2023.

Our independent registered public accounting firm, Ernst & Young LLP, has issued an audit report on our internal control over financial reporting, which is included in this Form 10-K.

1 unchanged sentence

There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2023, 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.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic.

We are continually monitoring and assessing the effect of the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

On June 1, 2021, we acquired Nordeus.

We are currently in the process of incorporating the internal controls and procedures of Nordeus into our internal control over financial reporting for purposes of our assessment of and report on internal control over financial reporting for the fiscal year ending March 31, 2023.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

21 unchanged sentences

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

1.1 Underwriting Agreement, dated as of April 7, 2022, by and among Take-Two Interactive Software, Inc., J.P.

Morgan Securities LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named in Schedule 1 thereto

8-K 4/13/2022 1.1

2.1 Agreement and Plan of Merger, dated as of January 9, 2022, by and among Take-Two Interactive Software, Inc., Zebra MS I, Inc., Zebra MS II, Inc.

an d Zynga Inc.

and Zynga Inc.

8-K 1/10/2022 2.1

5 unchanged sentences

8-K 5/5/2022 2.1

2.4 Take-Two Interactive Software, Inc.

Voting Agreement

S-4 3/14/2022 2.3

2.5 Form of Zynga Inc.

Voting Agreement signed by Zynga's executive officers and directors (other than Mark Pincus)

S-4 3/14/2022 2.4

2.6 Zynga Inc.

Voting Agreement signed by Mark Pincus and certain of his respective affiliates

S-4 3/14/2022 2.5

3.1 Restated Certificate of Incorporation

8 unchanged sentences

8-K 9/24/2012 3.1

3.1.5 Certificate of Amendment of Restated Certificate of Incorporation, dated May 20, 2022

8-K 5/26/2022 3.1

3.2 Certificate of Designation of Series A Preferred Stock, dated March 11, 1998

2 unchanged sentences

8-A12B 3/26/2008 4.2

3.4 Take-Two Interactive Software, Inc.'s Third Amended and Restated By-Laws, as adopted and effective on January 9, 2022

3.4 Take-Two Interactive Software, Inc.'s Fourth Amended and Restated By-Laws, as adopted and effective on January 4, 2023

8-K 1/6/2023 3.1

7 unchanged sentences

8-K 4/14/2022 4.2

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

4.4 Second Supplemental Indenture, dated as of April 14, 2022, between Take-Two Interactive Software, Inc.

4 unchanged sentences

8-K 4/14/2022 4.4

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

4.6 Fourth Supplemental Indenture, dated as of April 14, 2022, between Take-Two Interactive Software, Inc.

1 unchanged sentence

8-K 4/14/2022 4.5

4.7 Fifth Supplemental Indenture, dated as of April 14, 2023, between Take-Two Interactive Software, Inc.

and The Bank of New York Mellon, as Trustee.

8-K 4/14/2023 4.1

4.8 Sixth Supplemental Indenture, dated as of April 14, 2023, between Take-Two Interactive Software, Inc.

and The Bank of New York Mellon, as Trustee.

8-K 4/14/2023 4.2

4.9 Form of Global Note representing 3.300% Senior Notes due 2024 (included as part of Exhibit 4.

6 unchanged sentences

8-K 4/14/2022 4.9

4.13 Form of Global Note representing 5.000% Senior Notes due 2026 (included as part of Exhibit 4.7)

8-K 4/14/2023 4.3

4.14 Form of Global Note representing 4.950% Senior Notes due 2028 (included as part of Exhibit 4.8)

8-K 4/14/2023 4.4

4.15 First Supplemental Indenture, dated May 23, 2022, by and among Zynga Inc., Zebra MS II, Inc.

and Computershare Trust Company, N.A.

(as successor to Wells Fargo Bank, National Association), as trustee.

8-K 5/26/2022 4.1

4.16 First Supplemental Indenture, dated May 23, 2022, by and among Zynga Inc., Zebra MS II, Inc.

and Computershare Trust Company, N.A.

(as successor to Wells Fargo Bank, National Association), as trustee.

8-K 5/26/2022 4.2

10.1 Take-Two Interactive Software, Inc.

28 unchanged sentences

S-8 9/4/2020 99.2

10.13 Amendment to the Amended and Restated Take-Two Interactive Software, Inc.

2017 Stock Incentive Plan+

S-8 6/3/2022 99.2

10.14 Take-Two Interactive Software, Inc.

1 unchanged sentence

14A 7/27/2017 Annex C

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

10.15 Take-Two Interactive Software, Inc.

10 unchanged sentences

10-Q 11/8/2017 10.6

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

10.19 Form of Non-Employee Director Stock Grant Agreement Pursuant to the Take-Two Interactive Software Inc.

33 unchanged sentences

8-K 5/5/2022 10.1

10.32 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

10-K 5/14/2019 10.35

10.33 First Amendment to Credit Agreement and Incremental Amendment, dated as of June 28, 2021, by and among Take-Two Interactive Software, Inc., certain domestic subsidiaries of the Company, Goldman Sachs Bank USA, N.A.

and Wells Fargo Bank, National Association †

10.33 Restricted Unit Agreement dated as of June 1, 2022, by and between Take-Two Interactive Software, Inc.

and ZMC Advisors, L.P.

10-Q 8/9/2023 10.3

10.34 Restricted Unit Agreement dated as of June 1, 2022, by and between Take-Two Interactive Software, Inc.

and ZMC Advisors, L.P.

10-Q 8/9/2023 10.4

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

10.35 Restricted Unit Agreement dated as of June 1, 2022, by and between Take-Two Interactive Software, Inc.

and ZMC Advisors, L.P.

10-Q 8/9/2023 10.5

10.36 Credit Agreement, dated as of May 23, 2022, by and among Take-Two Interactive Software, Inc., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BOFA Securities, Inc.

and BNP Paribas

8-K 5/26/2022 10.1

10.37 Xbox 360 Publisher License Agreement dated November 17, 2005, between Microsoft Licensing, GP and the Company *

2 unchanged sentences

10-Q 6/5/2009 10.1

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

10.39 Amendment to the Xbox 360 Publisher License Agreement, dated November 22, 2011, between the Company and Microsoft Licensing, GP *

16 unchanged sentences

10-Q 11/6/2020 10.4

10.44 Lease Agreement between the Company and Moklam Enterprises, Inc.

dated July 1, 2002

10-Q 9/16/2002 10.2

10.45 Sixth Lease Modification Agreement, dated January 18, 2012, between the Company and Moklam Enterprises, Inc.

10-K 5/23/2012 10.45

10.46 Seventh Lease Modification Agreement, dated April 8, 2014, between the Company and Moklam Enterprises, Inc.

10-K 5/14/2014 10.39

10.47 Eighth Lease Modification Agreement, dated as of January 6, 2015, by and between Take-Two Interactive Software, Inc.

and Moklam Enterprises, Inc.

10-K 5/19/2016 10.47

10.48 Ninth Lease Modification Agreement, dated as of December 15, 2015, by and between Take-Two Interactive Software, Inc.

and Moklam Enterprises, Inc.

10-Q 2/4/2016 10.1

10.47 Lease Agreement, dated as of December 12, 2016, by and between Take-Two Interactive Software, Inc.

7 unchanged sentences

10-Q 11/4/2021 10.1

10.52 Agreement for the Sale and Purchase of Shares in Nordeus Limited, dated as of June 1, 2021, by and among Take-Two Interactive Software, Inc., Nordeus Holding Limited and the guarantors named therein † **

10-Q 8/3/2021 10.2

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

10.53 Amended and Restated Commitment Letter, dated as of January 28, 2022 by and among JPMorgan Chase Bank, N.A., and Take-Two Interactive Software, Inc.

S-4 3/14/2022 99.1

21.1 Subsidiaries of the Company

23.1 Consent of Ernst & Young LLP

Incorporated by Reference

Exhibit Number Exhibit Description Form Filing Date Exhibit Filed

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 2002

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Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded

within the Inline XBRL document.

101.INS The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH XBRL Taxonomy Extension Schema Document X

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Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language):

(i) Consolidated Balance Sheets at March 31, 2022 and 2021, (ii) Consolidated Statements of Operations for the fiscal years ended March 31, 2022, 2021 and 2020, (iii) Consolidated Statements of Comprehensive Income for the fiscal years ended March 31, 2022, 2021 and 2020, (iv) Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2022, 2021 and 2020, (v) Consolidated Statements of Stockholders' Equity for the fiscal years ended March 31, 2022, 2021 and 2020, and (vi) Notes to the Consolidated Financial Statements.

(i) Consolidated Balance Sheets at March 31, 2023 and 2022, (ii) Consolidated Statements of Operations for the fiscal years ended March 31, 2023, 2022 and 2021, (iii) Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended March 31, 2023, 2022 and 2021, (iv) Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2023, 2022 and 2021, (v) Consolidated Statements of Stockholders' Equity for the fiscal years ended March 31, 2023, 2022 and 2021, and (vi) Notes to the Consolidated Financial Statements.

Form 10-K Summary

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Consolidated Statements of Operations —For the fiscal years ended March 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Income —For the fiscal years ended March 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive (Loss) Income —For the fiscal years ended March 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows —For the fiscal years ended March 31, 2023, 2022 and 2021

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We have audited the accompanying consolidated balance sheets of Take-Two Interactive Software, Inc.

(the Company) as of March 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity for each of the three years in the period ended March 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of March 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ equity for each of the three years in the period ended March 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity with U.S.

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Revenue recognition

Description of the Matter As described in Note 1 to the consolidated financial statements, a significant portion of the Company’s revenue recognized is for full game software products that management must evaluate to determine whether such products sold have distinct and separable performance obligations.

Such performance obligations can be licenses for intellectual property that provide a functional offline gaming experience or game related services.

If multiple performance obligations are identified, management must estimate a standalone selling price for each identified performance obligation which is used to allocate the full game software product transaction price.

Revenue for amounts allocated to offline functionality is recognized upon delivery of the product.

Separately, revenue for amounts allocated to the game related services is recognized ratably over an estimated service period.

Significant judgment is exercised by the Company in identifying performance obligations within its full game software products that should be accounted for separately in each revenue arrangement, estimating the standalone selling price for each performance obligation and determining the service period that should be utilized to recognize revenue over time.

Auditing the identification of performance obligations for full game software products requires complex auditor judgment as each full game software product has unique features that management must evaluate to determine whether each feature should be accounted for separately.

Auditing the judgments and estimates made by management in determining the standalone selling prices for each identified performance obligation is especially challenging as the Company typically does not have observable standalone selling prices for each performance obligation and must rely on an expected cost-plus margin methodology, taking into account relevant cost assumptions including estimates of post-release support.

Similarly, auditing the estimated service period for the game related services is especially challenging as the Company must consider a variety of data points.

Description of the Matter As described in Note 1 to the consolidated financial statements, revenue for amounts allocated to the game related services for full game software products as well as virtual currency and in-game purchases is recognized ratably over an estimated service period.

Signiﬁcant judgment is exercised by the Company in determining the service period that should be utilized to recognize revenue over time.

Auditing the judgments and estimates made by management in estimating the service period for the game related services is especially challenging as the Company must consider a variety of data points.

Such data points include the weighted average number of days between players’ first and last days played online, known online trends, the service periods of the Company’s previously released products, and, to the extent publicly available, the service periods of the Company’s competitors’ products that are similar in nature.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of Company’s controls over the revenue recognition process.

We selected a sample of transactions and tested the Company’s controls over evaluating and identifying performance obligations, determining the estimated standalone selling price and estimating the service period over which game related services revenue is recognized.

Our audit procedures to test the Company’s identification of performance obligations included, among others, inspecting product-specific marketing materials for promised full game software product features, inspecting summaries of product features from Company personnel in product development roles, and independently evaluating the full game software product to corroborate identified product features on a sample basis.

Our audit procedures to test the Company’s estimates of standalone selling price for performance obligations included, among others, testing the underlying data used in management’s calculations for completeness and accuracy as well as evaluating the reasonableness of significant assumptions and other factors utilized in making estimates of standalone selling price.

For example, for a selection of full game software products which included multiple performance obligations, we tested the Company’s expected cost-plus margin analysis by testing the appropriateness of the assumptions used in the analysis, including product development costs and forecasted post-release support costs, marketing costs and licensing costs.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the revenue recognition process.

We selected a sample of transactions and tested the Company’s controls in relation to estimating the service period over which game related services revenue is recognized.

Our audit procedures to test and evaluate the reasonableness of the Company’s estimated service period included, among others, testing the completeness and accuracy of management’s player data analysis, testing qualitative factors utilized such as reviewing online trends, comparing to similar or historical products and analyzing competitor information.

Capitalized internally developed software costs

Description of the Matter As described in Note 1 to the consolidated financial statements, the Company capitalizes internally developed software costs, subsequent to establishing technological feasibility of a product.

As noted in Note 8, the Company had approximately $658.5 million of capitalized internally developed software as of March 31, 2022.

Auditing the Company’s determination of the establishment of technological feasibility was especially challenging because management’s determination of which products qualify and the related timing of capitalization requires significant judgment.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the internally developed software costs process.

For example, we tested the control over management’s evaluation of products that established technological feasibility.

To test the Company’s capitalization of internally developed software costs, we performed audit procedures that included, among others, inspecting underlying documentation to support management’s conclusion on the establishment of technological feasibility in accordance with the applicable accounting standards.

This included inspecting the product’s technical and game design documentation.

We also held corroborative inquiries of Company personnel in product development roles to assess the Company’s conclusions as to the technological feasibility of its products.

Valuation of intangible assets acquired in the Zynga acquisition

Description of the Matter As disclosed in Note 20 to the consolidated financial statements, the Company acquired Zynga on May 23, 2022 for total purchase consideration of $9,521.8 million.

The Company accounted for the business combination by recognizing the assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess recorded to goodwill.

The assets acquired included developed game technology, branding and trade names, and game engine technology which are intangible assets that were valued at $4,440 million, $384 million and $261 million, respectively, as of May 23, 2022.

Auditing the Company’s acquisition of Zynga was complex due to the significant estimation uncertainty in determining the fair value of identified intangible assets including developed game technology, branding and trade names, and game engine technology.

The significant assumptions used to estimate the value of the developed game technology and game engine technology intangible assets included revenue growth rates, EBITDA margins, long-term decay rates, and discount rates.

The significant assumptions used to estimate the value of the branding and trade names intangible assets included revenue growth rates, royalty rates and discount rates.

These significant assumptions were forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its accounting for the Zynga acquisition.

For example, we tested controls over the Company’s process to measure acquired intangible assets as well as controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the acquired intangible assets, our audit procedures included, among others, evaluating the valuation methodologies used, evaluating the significant assumptions described above and testing the completeness and accuracy of the underlying data used by the Company in its analyses.

For example, we evaluated the Company’s projected revenue growth rates and EBITDA margins by considering historical results of the acquired business and current industry and economic trends.

In addition, we involved our internal valuation specialists to assist in testing methodologies and certain significant assumptions used to value the acquired intangible assets.

We also performed a sensitivity analysis on certain of the significant assumptions to evaluate the change in the fair value estimates that would result from changes in assumptions.

Impairment of intangible assets that are subject to amortization

Description of the Matter As of March 31, 2023, the Company's intangible assets that are subject to amortization included developed game technology of $3,690.5 million.

As disclosed in Note 1 to the consolidated financial statements, intangible assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the related carrying amount of the asset or asset group may not be recoverable and the carrying amount of the asset exceeds estimated expected undiscounted future cash flows that are expected to result from the use of the asset.

During the fiscal year ended March 31, 2023, the Company recorded an impairment charge of $465.3 million related to certain of its developed game technology intangible assets.

Auditing the Company’s impairment tests was complex due to the significant estimation uncertainty in determining the fair value of the intangible assets that were tested for impairment.

The significant assumptions used to estimate the value of the intangible assets included revenue growth rates, EBITDA margins, long-term decay rates, and discount rates.

These significant assumptions were forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its process to determine the fair value of intangible assets that are subject to amortization being measured for impairment.

For example, we tested controls over management's review of the significant assumptions used to estimate the fair value of the developed game technology that was impaired.

To test the estimated fair value of the developed game technology intangible assets that were impaired, our audit procedures included, among others, evaluating the valuation methodology used, evaluating the significant assumptions described above and testing the completeness and accuracy of the underlying data used by the Company in its analyses.

For example, we evaluated the Company’s projected revenue growth rates and EBITDA margins by considering historical results and current industry and economic trends.

In addition, we involved our internal valuation specialists to assist in testing the methodology and certain significant assumptions used to value the developed game technology intangible assets that were impaired.

We also performed a sensitivity analysis on certain of the significant assumptions to evaluate the change in the fair value estimates that would result from changes in assumptions.

/s/ Ernst & Young LLP

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Opinion on Internal Control Over Financial Reporting

We have audited Take-Two Interactive Software, Inc.'s (the Company) internal control over financial reporting as of March 31, 2022, 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, 2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Nordeus Limited, which is included in the March 31, 2022 consolidated financial statements of the Company and constituted 5.6% of total assets as of March 31, 2022 and 1.5% of net revenue for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Nordeus Limited.

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, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows and stockholders’ equity for each of the three years in the period ended March 31, 2022, and the related notes and our report dated May 16, 2022 expressed an unqualified opinion thereon.

We have audited Take-Two Interactive Software, Inc.’s internal control over financial reporting as of March 31, 2023, 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, Take-Two Interactive Software, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Popcore GmbH, which is included in the March 31, 2023 consolidated financial statements of the Company and constituted 1.7% of total assets as of March 31, 2023 and 1.4% of net revenue for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Popcore GmbH.

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, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, cash flows and stockholders’ equity for each of the three years in the period ended March 31, 2023, and the related notes and our report dated May 25, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(in millions, except per share amounts)

Current assets:

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Accounts receivable, net of allowances of $ 1.3 and $ 0.4 at March 31, 2023 and 2022, respectively

579,433 552,762

Inventory 13,224 17,742

Software development costs and licenses 65.9 81.4

Deferred cost of goods sold 12,374 15,524

Contract assets 79.9 104.9

Prepaid expenses and other 277.1 193.4

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Lease liabilities 60.2 38.9

Short-term debt, net 1,346.8 —

Total current liabilities 3,851.6 2,105.0

Long-term debt, net 1,733.0 —

Non-current deferred revenue 35.5 70.9

1 unchanged sentence

Non-current software development royalties 110.2 115.5

Deferred tax liabilities, net 534.0 21.8

Other long-term liabilities 208.3 212.1

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no shares issued and outstanding at March 31, 2023 and 2022

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

Common stock, $ 0.01 par value, 300.0 and 200.0 shares authorized;

192.6 and 139.0 shares issued and 168.9 and 115.4 outstanding at March 31, 2023 and 2022, respectively

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CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(in millions, except per share amounts)

Fiscal Year Ended March 31,

2023 2022 2021

Net revenue $ 3,504,800 $ 3,372,772 $ 3,088,970

Cost of goods sold 1,535,401 1,535,085 1,542,450

Game $ 4,735.6 $ 3,423.2 $ 3,319.7

Advertising 614.3 81.6 53.1

Total net revenue 5,349.9 3,504.8 3,372.8

Cost of revenue 3,064.6 1,535.4 1,535.1

Gross profit 2,285.3 1,969.4 1,837.7

Selling and marketing 1,592.6 516.4 445.0

General and administrative 510,855 390,683 318,235

Research and development 892.5 406.6 317.3

General and administrative 843.1 511.7 390.4

Depreciation and amortization 122.3 61.1 55.6

Business reorganization 849 ( 272 ) 83

Total operating expenses 3,450.5 1,495.8 1,208.3

Income from operations 473,595 629,384 425,267

(Loss) income from operations ( 1,165.2 ) 473.6 629.4

Interest and other, net ( 141.9 ) ( 14.2 ) 8.8

Gain (loss) on long-term investments, net 6,015 39,636 ( 5,333 )

Income before income taxes 465,398 677,816 458,439

Provision for income taxes 47,376 88,930 53,980

Net income $ 418,022 $ 588,886 $ 404,459

Earnings per share:

Basic earnings per share $ 3.62 $ 5.14 $ 3.58

Diluted earnings per share $ 3.58 $ 5.09 $ 3.54

(Loss) gain on fair value adjustments, net ( 31.0 ) 6.0 39.6

(Loss) income before income taxes ( 1,338.1 ) 465.4 677.8

(Benefit from) provision for income taxes ( 213.4 ) 47.4 88.9

Net (loss) income $ ( 1,124.7 ) $ 418.0 $ 588.9

(Loss) earnings per share:

Basic (loss) earnings per share $ ( 7.03 ) $ 3.62 $ 5.14

Diluted (loss) earnings per share $ ( 7.03 ) $ 3.58 $ 5.09

See accompanying Notes.

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions)

2023 2022 2021

Net income $ 418,022 $ 588,886 $ 404,459

Other comprehensive income (loss)

Net (loss) income $ ( 1,124.7 ) $ 418.0 $ 588.9

Other comprehensive (loss) income

Foreign currency translation adjustment ( 58.9 ) ( 43.6 ) 51.3

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Change in fair value of available-for-sale securities 2.9 ( 5.1 ) 3.4

Other comprehensive income (loss) ( 48,681 ) 49,712 ( 21,187 )

Comprehensive income $ 369,341 $ 638,598 $ 383,272

Other comprehensive (loss) income ( 56.0 ) ( 48.7 ) 49.8

Comprehensive (loss) income $ ( 1,180.7 ) $ 369.3 $ 638.7

See accompanying Notes.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(in millions)

Fiscal Year Ended March 31,

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Operating activities:

Net income $ 418,022 $ 588,886 $ 404,459

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 1,124.7 ) $ 418.0 $ 588.9

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Amortization and impairment of software development costs and licenses 268.3 153.3 144.3

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Noncash lease expense 81.7 34.5 30.6

Amortization of intellectual property 64,817 32,241 20,990

Amortization and impairment of intellectual property 1,506.7 64.8 32.2

Depreciation 90.3 61.2 56.3

Impairment of software development costs and licenses 70,611 39,073 —

Interest expense 108.6 — —

Amortization of debt issuance costs 14.1 6.5 —

Deferred income taxes ( 410.8 ) 8.1 10.6

Gain on long-term investments, net ( 6,015 ) ( 41,588 ) —

Fair value adjustments 31.5 ( 6.0 ) ( 41.6 )

Other, net ( 26.6 ) 16.2 5.5

Changes in assets and liabilities:

Changes in assets and liabilities, net of effect from purchases of businesses:

Accounts receivable 106.8 ( 17.9 ) 47.2

Inventory 4,106 2,503 8,489

Software development costs and licenses ( 492.8 ) ( 387.0 ) ( 221.4 )

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Deferred revenue ( 141.9 ) ( 30.9 ) 152.5

Deferred cost of goods sold 3,139 4,768 32,180

Accounts payable, accrued expenses and other liabilities ( 405.1 ) ( 45.6 ) 78.7

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Other ( 8.1 ) 0.8 —

Net cash provided by (used in) investing activities 139,216 ( 806,724 ) 4,049

Net cash (used in) provided by investing activities ( 2,876.3 ) 139.2 ( 806.8 )

Financing activities:

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Cost of debt ( 22.4 ) ( 12.2 ) —

Other ( 234 ) — —

Net cash used in financing activities ( 256,813 ) ( 57,338 ) ( 77,453 )

Repayment of debt ( 200.0 ) ( 0.2 ) —

Settlement of capped calls 140.1 — —

Payment of convertible notes ( 1,166.8 ) — —

Proceeds from issuance of debt 3,248.9 — —

Payment of contingent earn-out consideration ( 26.8 ) — —

Net cash provided by (used in) financing activities 1,930.3 ( 256.8 ) ( 57.4 )

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents ( 15.9 ) ( 5.2 ) 18.6

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Cash, cash equivalents, and restricted cash and cash equivalents, beginning of year (1)

2,195.4 2,060.2 1,993.4

Cash, cash equivalents, and restricted cash equivalents, end of year (1)

$ 1,234.6 $ 2,195.4 $ 2,060.2

Supplemental data:

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(in millions)

Common Stock Additional

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Comprehensive

Income (Loss) Total

(Loss) Income Total

Stockholders'

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Change in cumulative foreign currency translation adjustment — — — — — — 51.3 51.3

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — ( 3,332 ) ( 3,332 )

Change in unrealized gains on cash flow hedge, net — — — — — — ( 4.9 ) ( 4.9 )

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 3.4 3.4

Stock-based compensation — — 113.7 — — — — 113.7

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Employee share purchase plan settlement 0.1 — 14.2 — — — — 14.2

Issuance of shared related to Playdots, Inc.

acquisitions 0.6 — 97.6 — — — — 97.6

Balance, March 31, 2021 137.6 1.4 2,288.8 ( 22.4 ) ( 820.6 ) 1,871.0 ( 8.6 ) 3,332.0

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Change in cumulative foreign currency translation adjustment — — — — — — ( 43.6 ) ( 43.6 )

Change in unrealized gains on cash flow hedge, net — — — — — — ( 4,905 ) ( 4,905 )

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — ( 5.1 ) ( 5.1 )

Repurchased common stock — — — ( 1.3 ) ( 200.0 ) — — ( 200.0 )

Stock-based compensation — — 258.7 — — — — 258.7

Issuance of restricted stock, net of forfeitures and cancellations 1,376 13 ( 13 ) — — — — —

Net share settlement of restricted stock awards ( 0.4 ) — ( 64.1 ) — — — — ( 64.1 )

Issuance of restricted stock, net of forfeitures and cancellations 1.2 — — — — — — —

Issuance of shares related to Nordeus.

acquisition 0.5 — 94.1 — — — — 94.1

Employee share purchase plan settlement 0.1 — 19.7 — — — — 19.7

Issuance of shared related to Playdots, Inc.

acquisitions 604 6 97,641 — — — — 97,647

Balance, March 31, 2022 139.0 1.4 2,597.2 ( 23.7 ) ( 1,020.6 ) 2,289.0 ( 57.3 ) 3,809.7

Net income — — — — — 418,022 — 418,022

Net loss — — — — — ( 1,124.7 ) — ( 1,124.7 )

Change in cumulative foreign currency translation adjustment — — — — — — ( 58.9 ) ( 58.9 )

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — ( 5,092 ) ( 5,092 )

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

Stock-based compensation — — 389.3 — — — — 389.3

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — 2.9 2.9

Issuance of restricted stock, net of forfeitures and cancellations 2.7 — — — — — — —

Exercise of stock options 1.0 — 43.1 — — — — 43.1

Net share settlement of restricted stock awards ( 0.9 ) — ( 108.1 ) — — — — ( 108.1 )

Employee share purchase plan settlement 0.2 — 22.3 — — — — 22.3

Issuance of shares related to Nordeus.

acquisition 515 5 94,149 — — — — 94,154

Issuance of shares related to Zynga acquisition 46.3 0.5 5,377.2 — — — — 5,377.7

Issuance of shares related to Popcore acquisition 0.6 — 57.8 — — — — 57.8

Stock-based compensation assumed in Zynga acquisition — — 151.7 — — — — 151.7

Issuance of shares related to Zynga convertible notes 3.7 — 479.7 — — — — 479.7

Balance, March 31, 2023 192.6 1.9 $ 9,010.2 ( 23.7 ) $ ( 1,020.6 ) $ 1,164.3 $ ( 113.3 ) $ 9,042.5

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(In millions, except per share amounts)

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe.

We develop and publish products principally through Rockstar Games, 2K, Private Division, and T2 Mobile Games.

Our products are designed for console gaming systems, personal computers ("PC"), and mobile including smart phones and tablets ("Mobile"), and are delivered through physical retail, digital download, online platforms, and cloud streaming services.

Pending Acquisition of Zynga

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

We develop, operate, and publish products principally through Rockstar Games, 2K, Private Division, and Zynga.

Our products are currently designed for console gaming systems, PC, and mobile, including smartphones and tablets.

We deliver our products through physical retail, digital download, online platforms, and cloud streaming services.

Acquisition of Zynga

On May 23, 2022, we completed our acquisition of Zynga Inc.

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

Refer to Note 23 - Sub sequent Ev ents for additional information.

Refer to Note 2 0 - Acquisitions for additional information.

Principles of Consolidation

The Consolidated Financial Statements include the financial statements of the Company and its wholly-owned subsidiaries.

All inter-company balances and transactions have been eliminated in consolidation.

All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

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These estimates generally involve complex issues and require us to make judgments, involve analysis of historical and the prediction of future trends, and are subject to change from period to period.

Actual amounts could differ significantly from these estimates, including as a result of the COVID-19 pandemic, which may affect economic conditions in a number of different ways and result in uncertainty and risk.

Actual amounts could differ significantly from these estimates, which may affect economic conditions in a number of different ways and result in uncertainty and risk.

We consider transactions or events that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures.

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Customers that individually accounted for more than 10% of our gross accounts receivable balance comprised 50.3 % and 63.8 % of such balances at March 31, 2023 and 2022, respectively.

We had two customers who accounted for 43.5 % and 20.3 % of our gross accounts receivable as of March 31, 2022 and two customers who accounted for 50.4 % and 18.8 % of our gross accounts receivable as of March 31, 2021.

We had three customers who accounted for 21.6 %, 14.5 %, and 14.2 % of our gross accounts receivable as of March 31, 2023 and two customers who accounted for 43.5 % and 20.3 % of our gross accounts receivable as of March 31, 2022.

We did not have any additional customers that exceeded 10% of our gross accounts receivable as of March 31, 2023 and 2022.

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The ultimate value realized on these securities is subject to market price volatility until they are sold.

Inventory consists of materials, including manufacturing royalties paid to console manufacturers, and is stated at the lower of weighted average cost or net realizable value.

Estimated product returns are included in the inventory balance at their cost.

We regularly review inventory quantities on-hand and in the retail channels and record an inventory provision for excess or obsolete inventory based on the future expected demand for our products.

Significant changes in demand for our products would affect management's estimates in establishing our inventory provision.

We write down inventory based on excess or obsolete inventories determined primarily by anticipated future demand for our products.

Inventory write-downs are measured as the difference between the cost of the inventory and market value, based upon assumptions about future demand that are inherently difficult to assess.

Software Development Costs and Licenses

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We enter into agreements with third-party developers that require us to make payments for game development and production services.

In exchange for our payments, we receive the exclusive publishing and distribution rights to the finished game title as well as, in some cases, the underlying intellectual property rights.

In exchange for our payments, we receive the exclusive publishing and distribution rights to the finished

game title as well as, in some cases, the underlying intellectual property rights.

Such agreements typically allow us to fully recover these payments to the developers at an agreed upon royalty rate earned on the subsequent sales of such software, net of any agreed upon costs.

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In addition to guaranteed minimum payments, these licenses frequently contain provisions that could require us to pay royalties to the license holder based on pre-agreed unit sales thresholds.

Amortization of capitalized software development costs and licenses commences when a product is available for general release and is recorded on a title-by-title basis in cost of goods sold.

Amortization of capitalized software development costs and licenses commences when a product is available for general release and is recorded on a title-by-title basis in cost of revenue.

For capitalized software development costs, annual amortization is calculated using (1) the proportion of current year revenue to the total revenue expected to be recorded over the life of the title or (2) the straight-line method over the remaining estimated life of the title, whichever is greater.

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Amortization periods for our software products generally range from 12 to 30 months.

Certain government grants earned on qualified production spend generally either reduce the cost basis of our capitalized software development costs, which therefore results in reduced expense over the amortization period, or reduce period development expense recognized for titles that do not meet the capitalization criteria.

Such incentives are accounted for by analogizing under ASC 105-10-05-2 to the grant accounting model under IAS 20.

We evaluate the future recoverability of capitalized software development costs and licenses on a quarterly basis.

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We use a number of criteria in evaluating expected product performance, including historical performance of comparable products developed with comparable technology, market performance of comparable titles, orders for the product prior to its release, general market conditions, and past performance of the franchise.

When we determine that capitalized cost of the title is unlikely to be recovered by product sales, an impairment of software development and license costs capitalized is charged to cost of goods sold in the period in which such determination is made.

When we determine that capitalized cost of the title is unlikely to be recovered by product sales, an impairment of software development and license costs capitalized is charged to cost of revenue in the period in which such determination is made.

We have profit and unit sales based internal royalty programs that allow selected employees to participate in the success of software titles that they assist in developing.

Royalties earned under these programs are recorded as a component of Cost of goods sold in the period earned.

Royalties earned under these programs are recorded as a component of Cost of revenue in the period earned.

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.

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The cost of additions and improvements are capitalized, and repairs and maintenance costs are charged to operations, in the periods incurred.

When depreciable assets are retired or sold, the cost and related allowances for depreciation are

removed from the accounts and the gain or loss, if any, is recognized.

When depreciable assets are retired or sold, the cost and related allowances for depreciation are removed from the accounts and the gain or loss, if any, is recognized.

The carrying amounts of these assets are recorded at historical cost.

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If there is an identified asset in the contract (either explicitly or implicitly) and we have control over its use, the contract is (or contains) a lease.

In certain of our lease arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease.

In certain of our lease

arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease.

For these arrangements, there is judgment in evaluating if the arrangement provides us with an asset that is physically distinct, or that represents substantially all of the capacity of the asset, and if we have the right to direct the use of the asset.

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We do not separate non-lease components from the related lease components.

Goodwill and Intangible Assets

Goodwill is the excess of purchase price paid over identified intangible and tangible net assets of acquired companies.

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These estimates and assumptions include long-term growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates based on our weighted average cost of capital, future economic and market conditions and the determination of appropriate, comparable market data.

Our estimates for market growth are based on historical data, various internal estimates and observable external sources when available, and are based on assumptions that are consistent with the plans and estimates we use to manage the underlying business.

Our estimates for market growth are based on historical data, various internal estimates, and observable external sources when available.

Those estimates are based on assumptions that are consistent with the plans and estimates we use to manage the underlying business.

Based on our annual impairment assessment process for goodwill, no impairments were recorded during the fiscal years ended March 31, 2023, 2022, or 2021.

As of March 31, 2023, the goodwill balance of one of our reporting units is $ 6,377.0 , and a moderate reduction in its fair value may result in an impairment charge, which would be equal to the excess carrying value over the fair value of such assets.

Such a reduction in fair value could result from a reduction in our long-term growth rates and operating margins used to calculate projected future cash flows or a change in any of the estimates mentioned above.

Long-lived Assets

We review all long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amount of an asset or asset group may not be recoverable.

We review all long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the related carrying amount of an asset or asset group may not be recoverable.

We compare the carrying amount of the asset to the estimated undiscounted future cash flows expected to result from the use of the asset.

If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we record an impairment charge for the difference between the carrying amount of the asset and its fair value.

The estimated fair value is generally measured by discounting expected future cash flows using our incremental borrowing rate or discount rate, if available.

The estimated fair value is generally measured by discounting expected future cash flows using an appropriate discount rate.

As of March 31, 2023, no indicators of impairment existed.

Refer to Note 9 - Goodwill and Intangible Assets , Net and Note 13 - Leases for impairments that occurred in the fiscal year ended March 31, 2023.

Derivatives and Hedging

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The changes in fair value of derivatives that are not designated as hedges are recognized currently in earnings as Interest and other, net in our Consolidated Statements of Operations.

If a derivative meets the definition of a cash flow hedge and is so designated, the effective portion of changes in the fair value of the derivative are recognized, as a component of Other comprehensive income (loss) while the ineffective portion of the changes in fair value is recorded currently in earnings as Interest and other, net in our Consolidated Statements of Operations.

Amounts included in Accumulated other comprehensive income (loss) for cash flow hedges are reclassified into earnings in the same period that the hedged item is recognized in Cost of goods sold, Research and development expenses, or Interest and other, net, as appropriate.

If a derivative meets the definition of a cash flow hedge and is so designated, the effective portion of changes in the fair value of the derivative are recognized, as a component of Other comprehensive (loss) income while the ineffective portion of the changes in fair value is recorded currently in earnings as Interest and other, net in our Consolidated Statements of Operations.

Amounts included in Accumulated other comprehensive (loss) income for cash flow hedges are reclassified into earnings in the same period that the hedged item is recognized in Cost of revenue, Research and development expenses, or Interest and other, net, as appropriate.

We record a tax provision for the anticipated tax consequences of the reported results of operations.

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We derive revenue primarily from the sale of our interactive entertainment content, principally for console gaming systems, personal computers, and mobile.

We also generate revenue from advertising within our software products.

Our interactive entertainment content consists of full game software products that may contain offline gameplay, online gameplay, or a combination of offline and online gameplay.

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Revenue from the sale of separate downloadable add-on content is evaluated for revenue recognition on the same basis as our full game software products.

In addition to sales of our full game software products, we also offer free-to-play software products, both of which may provide customers with the option to acquire virtual currency or make in-game purchases.

For virtual currency and in-game purchases the satisfaction of our performance obligation is dependent on the nature of the virtual item purchased and as a result, we categorize our virtual items as follows:

• Consumable:

Consumable virtual items represent items that can be consumed by a specific player action.

Consumable virtual items do not result in a direct benefit that the player keeps or provide the player any continuing benefit following consumption, and they often enable a player to perform an in-game action immediately.

For the sale of consumable virtual items, we recognize revenue as the items are consumed (i.e., over time), which approximates less than one month.

Durable virtual items represent items that are accessible to the player over an extended period of time.

We recognize revenue from the sale of durable virtual items ratably over the estimated service period for the applicable game (i.e., over time), which represents our best estimate of the average life of the durable virtual item.

Certain software products are sold to customers with a “street date” (the earliest date these products may be sold by these retailers).

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For the sale of physical software products, recognition of revenue allocated to game related services does not begin until the product is sold-through by our customer to the end user.

We currently estimate sell-through to the end user for all our titles to be approximately two months after we have sold-in the software products to retailers.

We currently estimate sell-

through to the end user for all our titles to be approximately two months after we have sold-in the software products to retailers.

Determining the estimated sell-through period requires management judgment and estimates.

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Revenue from digital downloads generally commences when the download is made available to the end user by a third-party digital storefront.

Our payment terms and conditions vary by customer and typically provide net 30- to 60-day terms.

In instances where the timing of revenue recognition differs from the timing of invoicing, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less.

In certain countries, we use third-party licensees to distribute and host our games in accordance with license agreements, for which the licensees typically pay us a fixed minimum guarantee and sales-based royalties.

These arrangements typically include multiple performance obligations, such as an upfront license of intellectual property and rights to future updates.

Based on the allocated transaction price, we recognize revenue associated with the minimum guarantee when we

transfer control of the upfront license of intellectual property (generally upon commercial launch) and the remaining portion ratably over the contractual term in which we provide the licensee with future update rights.

Based on the allocated transaction price, we recognize revenue associated with the minimum guarantee when we transfer control of the upfront license of intellectual property (generally upon commercial launch) and the remaining portion ratably over the contractual term in which we provide the licensee with future update rights.

Royalty payments in excess of the minimum guarantee are generally recognized when the licensed product is sold by the licensee.

We have contractual relationships with advertising networks, agencies, advertising brokers, and directly with advertisers to display advertisements in our games.

For our in-game advertising arrangements, our performance obligation is to provide the inventory for advertisements to be displayed in our games.

For contracts made directly with advertisers, we are also obligated to serve the advertisements in our games.

However, for those direct advertising arrangements, providing the advertising inventory and serving the advertisement is considered a single performance obligation, as the advertiser cannot benefit from the advertising space without its advertisements being displayed.

For in-game display advertisements, in-game offers, engagement advertisements, and other advertisements, our performance obligation is satisfied over the life of the contract, with revenue being recognized as advertising units are delivered.

Contract Balances

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Contract assets generally consist of arrangements for which we have recognized revenue to the extent it is probable that significant reversal will not occur but do not have a right to invoice as of the reporting date.

Contract assets are recorded within Prepaid expenses and other on our Consolidated Balance Sheet.

Our allowances for doubtful accounts are typically immaterial and, if required, are based on our best estimate of expected credit losses inherent in our accounts receivable balance.

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Based on our evaluation of the above indicators, for sales arrangements via Microsoft’s Xbox Live, Sony’s PlayStation Network, Valve's Steam, and Epic Games Store we have determined we are not the principal in the sales transaction to the end user and therefore we report revenue based on the consideration received from the digital storefront.

For sales arrangements via Apple's App Store and the Google Play Store, we have determined that we are the principal to the end user and thus report revenue on a gross basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within Cost of goods sold.

For sales arrangements via Apple's App Store and the Google Play Store, we have determined that we are the principal to the end user and thus report

revenue on a gross basis and mobile platform fees charged by these digital storefronts are expensed as incurred and reported within Cost of revenue.

Shipping and Handling

Shipping and handling costs are incurred to move physical software products to customers.

We recognize all shipping and handling costs as an expense in Cost of goods sold because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

We recognize all shipping and handling costs as an expense in Cost of revenue because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

Estimated Service Period

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We consider a variety of data points when determining and subsequently reassessing the estimated service period for players of our software products.

Primarily, we review the weighted average number of days between players’ first and last days played online.

Primarily, we review the weighted average number of days between players’ first day played online or first in-game purchase and last day played online.

When a new game is launched and therefore no history of online player data is available, we consider other factors to determine the user life, such as the estimated service period of other games actively being sold with similar characteristics.

We also consider known online trends, the service periods of our previously released software products, and, to the extent publicly available, the service periods of our competitors’ software products that are similar in nature to ours.

We believe this provides a reasonable depiction of the transfer of our game related services to our

customers, as it is the best representation of the period during which our customers play our software products.

We believe this provides a reasonable depiction of the transfer of our game related services to our customers, as it is the best representation of the period during which our customers play our software products.

Determining the estimated service period is subjective and requires significant management judgment and estimates.

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These incentives are considered adjustments to the transaction price of our software products and are reflected as reductions to revenue.

Sales incentives incurred by us for distinct goods or services received, such as the appearance of our products in a customer’s national circular ad, are included in Selling and marketing expense if there is a separate identifiable benefit and the benefit’s fair value can be established.

Sales incentives incurred by us for distinct goods or services received, such as the appearance of our

products in a customer’s national circular ad, are included in Selling and marketing expense if there is a separate identifiable benefit and the benefit’s fair value can be established.

Otherwise, such sales incentives are reflected as a reduction to revenue.

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Adjustments to estimates are recorded in the period in which they become known.

Payment Terms

Our payment terms and conditions vary by customer and typically provide net 30- to 60-day terms.

We expense marketing costs as incurred, except for production costs associated with media advertising, which are deferred and charged to expense when the related advertisement is run for the first time.

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Our plans include time-based, market-based, and performance-based awards of our common stock to employees and non-employees.

In connection with the Zynga Acquisition, we assumed replacement equity awards, including restricted stock units and the outstanding and unexercised options to purchase Zynga common stock, and converted them into stock-based awards for shares of Take-Two common stock.

Refer to Note 16 - Stock-Based Compensation .

We account for stock-based awards under the fair value method of accounting.

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For performance-based shares, we do not record expense until the performance criteria are considered probable.

We estimate the fair value of stock options using the Black-Scholes option-pricing model.

This model requires the use of the following assumptions:

expected volatility of our common stock, which is based on our own calculated historical rate;

expected life of the option award;

expected dividend yield, which is 0 %, as we have not paid and do not have any plans to pay dividends on our common stock;

and the risk-free interest rate, which is based on the U.S.

Treasury rate in effect at the time of grant with maturities commensurate to the stock option award’s expected life.

If any of the assumptions used in the Black-Scholes model changes significantly, stock-based compensation expense for future awards may differ materially compared to awards granted previously.

We record stock-based compensation expense for stock options based on the grant date fair value on a straight-line basis over the requisite service period of the award.

Stock-based compensation expense is recorded net of forfeitures as they occur.

Earnings (loss) per Share ("EPS")

Basic EPS is computed by dividing the net income (loss) applicable to common stockholders for the period by the weighted average number of shares of common stock outstanding during the same period.

Diluted EPS is computed by dividing the net income (loss) applicable to common stockholders for the period by the weighted average number of shares of common stock and common stock equivalents outstanding.

Basic EPS is computed by dividing the net (loss) income applicable to common stockholders for the period by the weighted average number of shares of common stock outstanding during the same period.

Diluted EPS is computed by dividing the net income applicable to common stockholders for the period by the weighted average number of shares of common stock and common stock equivalents outstanding.

Common stock equivalents are measured using the treasury stock method and represent unvested stock-based awards.

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dollars using exchange rates for assets and liabilities at the balance sheet date and average prevailing exchange rates for the period for revenue and expense accounts.

Adjustments resulting from translation are included in accumulated other comprehensive income (loss).

Adjustments resulting from translation are included in accumulated other comprehensive (loss) income.

Realized and unrealized transaction gains and losses are included in our Consolidated Statements of Operations in the period in which they occur.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.

Accumulated other comprehensive income (loss) includes foreign currency translation adjustments, which relate to investments that are permanent in nature and therefore do not require tax adjustments, and the amounts for unrealized gains (losses), net on derivative instruments designated as cash flow hedges, as well as any associated tax impact, and available for sale securities.

Comprehensive (Loss) Income

Comprehensive (loss) income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.

Accumulated other comprehensive (loss) income includes foreign currency translation adjustments, which relate to investments that are permanent in nature and therefore do not require tax adjustments, and the amounts for unrealized gains (losses), net on derivative instruments designated as cash flow hedges, as well as any associated tax impact, and available for sale securities.

Recently Adopted Accounting Pronouncements

Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law.

We adopted this update effective April 1, 2021.

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

Recently Issued Accounting Pronouncements

Accounting for Government Assistance

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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.

We adopted this update effective April 1, 2022.

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

The new guidance is effective for fiscal years beginning after December 15, 2021, with the new disclosures required on an annual basis, and can be applied either prospectively or retrospectively.

We adopted the new guidance on April 1, 2022 and included the required disclosures with respect to any government assistance or grants subject to the scope of the guidance to the extent material.

Refer to Note 7 - Software Development Costs and Licenses .

Accounting for Contract Assets and Contract Liabilities

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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 early adopted this update for our fiscal year 2023 on April 1, 2022.

There was no impact of adopting this guidance on our Consolidated Financial Statements.

We adopted this effective April 1, 2022.

The adoption of this update did not have an impact on our Consolidated Financial Statements and was applied to our acquisition of Zynga.

Refer to Note 20 - Acquisitions .

Accounting for Convertible Debt

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments by reducing the number of accounting models and generally requiring that a convertible instrument be accounted for as a single liability measured at amortized cost, with no conversion feature separately recorded in equity.

Similarly, no portion of issuance costs will be allocated to equity under the ASU.

Further, the ASU amends the earnings per share guidance by requiring the diluted earnings per share calculation for convertible instruments to follow the if-converted method, with use of the treasury stock method no longer permitted.

We adopted this effective April 1, 2022.

The adoption of this update did not have an impact on our Consolidated Financial Statements.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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Timing of recognition

Product revenue is primarily comprised of the portion of revenue from software products that is recognized when the customer takes control of the product (i.e.

Net revenue recognized at a point in time is primarily comprised of the portion of revenue from software products that is recognized when the customer takes control of the product (i.e.

upon delivery of the software product).

Service and other revenue is primarily comprised of revenue from our software products that include game related services, or separate virtual currency transactions, and in-game purchases, which are recognized over an estimated service period.

Net revenue by service and other revenue and product was as follows:

Net revenue recognized over time is primarily comprised of revenue from our software products that include game related services, separate virtual currency transactions, and in-game purchases, which are recognized over an estimated service period.

Over time net revenue includes in-game advertising.

Net revenue by timing of recognition was as follows:

Fiscal Year Ended March 31,

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Net revenue recognized:

Service and other (over time) $ 2,461,619 $ 2,281,555 $ 1,839,696

Product (point in time) 1,043,181 1,091,217 1,249,274

Over time $ 4,208.0 $ 2,214.8 $ 2,063.7

Point in time 1,141.9 1,290.0 1,309.1

Total net revenue $ 5,349.9 $ 3,504.8 $ 3,372.8

Recurrent consumer spending revenue is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases.

Recurrent consumer spending revenue is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising.

Full game and other revenue primarily includes the initial sale of full game software products, which may include offline and/or significant game related services.

Net revenue by recurrent consumer spending revenue and full game and other was as follows:

Net revenue by content was as follows:

Fiscal Year Ended March 31,

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Net revenue recognized:

Mobile $ 2,538.6 $ 403.4 $ 274.1

Console 2,303.8 2,528.9 2,517.0

PC and other 507.5 572.5 581.7

Mobile 403,437 274,077 185,749

Total net revenue $ 5,349.9 $ 3,504.8 $ 3,372.8

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The balance of deferred revenue, including current and non-current balances, as of March 31, 2023 and March 31, 2022 were $ 1,114.3 and $ 936.2 , respectively.

For the fiscal year ended March 31, 2022, the additions to our deferred revenue balance were primarily due 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.

For the fiscal year ended March 31, 2023, the additions to our deferred revenue balance were primarily due to the acquisition of Zynga ( Note 2 0 - Acquisitions ), which added $ 333.1 to our deferred revenue balance and 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 fiscal year ended March 31, 2023, $ 860.1 of revenue was recognized that was included in the deferred revenue balance at the beginning of the period.

During the fiscal year ended March 31, 2023, $ 332.1 of revenue was recognized from the deferred revenue balance acquired from the Zynga acquisition.

As of March 31, 2023, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,272.2 , which includes our deferred revenue balances and amounts to be invoiced and recognized as revenue in future periods.

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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 March 31, 2022 and March 31, 2021, our contract asset balances were $ 104,913 and $ 105,554 , respectively, which are included within Prepaid and other in our Consolidated Balance Sheet.

As of March 31, 2023 and March 31, 2022, our contract asset balances were $ 79.9 and $ 104.9 , respectively.

MANAGEMENT AGREEMENT

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The 2017 Management Agreement provides for an annual management fee of $ 3.1 over the term of the agreement and a maximum annual bonus opportunity of $ 7.4 over the term of the agreement, based on the Company achieving certain performance thresholds.

In May 2022, we entered into a new management agreement (the "2022 Management Agreement") with ZelnickMedia that replaced the 2017 Management Agreement and pursuant to which ZelnickMedia will continue to provide financial and management consulting services to the Company through March 31, 2029.

The 2022 Management Agreement became effective May 23, 2022, when our acquisition of Zynga closed (refer to Note 2 0 - Acquisitions ).

On May 21, 2022, ZelnickMedia

assigned substantially all of its rights and obligations and other liabilities under the 2022 Management Agreement to ZMC Advisors, L.P.

("ZMC Advisors").

References to "ZMC" herein shall mean either ZelnickMedia or ZMC Advisors, as appropriate.

As part of the 2022 Management Agreement, Strauss Zelnick continues to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff continues to serve as President of the Company.

The 2022 Management Agreement provides for an annual management fee of $ 3.3 over the term of the agreement and a maximum annual bonus opportunity of $ 13.2 over the term of the agreement, based on the Company achieving certain performance thresholds.

In connection with the 2022 Management Agreement, we expect to grant time-based and performance-based restricted units to ZelnickMedia.

In consideration for ZelnickMedia's services, we recorded consulting expense (a component of General and administrative expenses) of $ 3.5 , $ 9.9 , and $ 10.5 for the fiscal years ended March 31, 2023, 2022, and 2021, respectively.

Pursuant to the 2017 Management Agreement, we also issued stock-based awards to ZelnickMedia.

Pursuant to the 2022 Management Agreement and 2017 Management Agreement, we also issued stock-based awards to ZelnickMedia.

During the fiscal years ended March 31, 2023, 2022, and 2021, we recorded $ 47.1 , $ 29.2 , and $ 27.3 , respectively, of stock-based compensation expense for non-employee awards, which is included in General and administrative expenses.

See Note 1 6 - Stock-Based Compensation for a discussion of such awards.

In May 2022, we entered into a new management agreement (the "2022 Management Agreement") with ZelnickMedia that, once effective, will replace the 2017 Management Agreement and pursuant to which ZelnickMedia will continue to provide financial and management consulting services to the Company through March 31, 2029.

The 2022 Management Agreement will become effective when our pending acquisition of Zynga closes (refer to Note 23 - Subsequent Ev ents ).

As part of the 2022 Management Agreement, Strauss Zelnick, the President of ZelnickMedia, will continue to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff, a partner of ZelnickMedia, will continue to serve as President of the Company.

The 2022 Management Agreement provides for an annual management fee of $ 3,300 over the term of the agreement and a maximum annual bonus opportunity of $ 13,200 over the term of the agreement, based on the Company achieving certain performance thresholds.

In connection with the 2022 Management Agreement, we expect to grant time-based and performance-based restricted units to ZelnickMedia.

FAIR VALUE MEASUREMENTS

The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value because of their short maturities.

Recurring fair value measurements

The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, prepaid expenses and other, accounts payable, and accrued expenses and other current liabilities, approximate fair value because of their short maturities.

We follow a three-level fair value hierarchy that prioritizes the inputs used to measure fair value.

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The table below segregates all assets 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.

2022 Quoted prices

in active markets

for identical

assets (level 1) Significant other

observable inputs

(level 2) Significant

(level 3) Balance Sheet Classification

Bank-time deposits $ 636,000 $ 636,000 $ — $ — Cash and cash equivalents

Money market funds 501,903 501,903 — — Cash and cash equivalents

Commercial paper 119,377 — 119,377 — Cash and cash equivalents

US Treasuries 51,977 51,977 — — Cash and cash equivalents

Certificates of Deposit 10,005 — 10,005 — Cash and cash equivalents

Corporate bonds 2,801 — 2,801 — Cash and cash equivalents

Money market funds 356,830 356,830 — — Restricted cash and cash equivalents

Bank-time deposits 531 531 — — Restricted cash and cash equivalents

Corporate Bonds 538,460 — 538,460 — Short-term investments

Bank-time deposits 131,797 131,797 — — Short-term investments

Commercial paper 125,390 — 125,390 — Short-term investments

US Treasuries 23,414 23,414 — — Short-term investments

Certificates of Deposit 999 — 999 — Short-term investments

Private equity 16,134 — — 16,134 Other assets

Money market funds 103,452 103,452 — — Restricted cash and cash equivalents, long term

Foreign currency forward contracts ( 202 ) — ( 202 ) — Accrued expenses and other current liabilities

Contingent earn-out consideration ( 66,025 ) — — ( 66,025 ) Accrued expenses and other current liabilities

Contingent earn-out consideration ( 43,030 ) — — ( 43,030 ) Other long-term liabilities

Total recurring fair value measurements, net $ 2,509,813 $ 1,805,904 $ 796,830 $ ( 92,921 )

2021 Quoted prices

in active markets

for identical

assets (level 1) Significant other

observable inputs

(level 2) Significant

(level 3) Balance Sheet Classification

Money market funds $ 837,614 $ 837,614 $ — $ — Cash and cash equivalents

Bank-time deposits 95,000 95,000 — — Cash and cash equivalents

Commercial paper 100,105 — 100,105 — Cash and cash equivalents

Money market funds 528,659 528,659 — — Restricted cash and cash equivalents

Bank-time deposits 563 563 — — Restricted cash and cash equivalents

Corporate Bonds 521,224 — 521,224 — Short-term investments

Bank-time deposits 578,762 578,762 — — Short-term investments

US Treasuries 60,086 60,086 — — Short-term investments

Commercial paper 148,150 — 148,150 — Short-term investments

Asset-backed securities 470 — 470 — Short-term investments

Money market funds 98,541 98,541 — — Long-term restricted cash and cash equivalents

Private equity 7,578 — — 7,578 Other assets

Foreign currency forward contracts ( 125 ) — ( 125 ) — Accrued expenses and other current liabilities

Total recurring fair value measurements, net $ 2,976,627 $ 2,199,225 $ 769,824 $ 7,578

In connection with the Nordeus acquisition (see Note 22 - Acquisitions ), we recorded $ 61,055 as the initial fair value of contingent earn-out consideration.

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 fiscal year ended March 31, 2022, we recognized General and administrative expense of $ 48,000 within our 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 $ 109,055 .

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

March 31, 2023

Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Total

Cash and cash equivalents:

Money market funds $ 368.0 $ — $ — $ 368.0

Bank-time deposits 145.8 — — 145.8

Short-term investments:

Corporate bonds — 145.2 — 145.2

Bank-time deposits 41.8 — — 41.8

Restricted cash and cash equivalents:

Money market funds 306.1 — — 306.1

Bank-time deposits 0.5 — — 0.5

Restricted cash and cash equivalents, long term:

Money market funds 99.6 — — 99.6

Other assets:

Private equity — — 26.5 26.5

Total financial assets $ 961.8 $ 145.2 $ 26.5 $ 1,133.5

Accrued expenses and other current liabilities:

Foreign currency forward contracts $ — $ 2.5 $ — $ 2.5

Contingent earn-out consideration — — 66.6 66.6

Other-long term liabilities:

Contingent earn-out consideration — — 27.3 27.3

Long-term debt, net:

Convertible notes — 44.1 — 44.1

Total financial liabilities $ — $ 46.6 $ 93.9 $ 140.5

March 31, 2022

Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Total

Cash and cash equivalents:

Bank-time deposits $ 636.0 $ — $ — $ 636.0

Money market funds 501.9 — — 501.9

Commercial paper — 119.4 — 119.4

US Treasuries 52.0 — — 52.0

Certificates of Deposit — 10.0 — 10.0

Corporate bonds — 2.8 — 2.8

Restricted cash and cash equivalents:

Money market funds 356.8 — — 356.8

Bank-time deposits 0.5 — — 0.5

Short-term investments:

Corporate bonds — 538.5 — 538.5

Bank-time deposits 131.8 — — 131.8

Commercial paper — 125.4 — 125.4

US Treasuries 23.4 — — 23.4

Certificates of Deposit — 1.0 — 1.0

Other assets:

Private equity — — 16.1 16.1

Restricted cash and cash equivalents, long term:

Money market funds 103.5 — — 103.5

Total financial assets $ 1,805.9 $ 797.1 $ 16.1 $ 2,619.1

Accrued expenses and other current liabilities:

Foreign currency forward contracts $ — $ 0.2 $ — $ 0.2

Contingent earn-out consideration — — 66.0 66.0

Other long-term liabilities:

Contingent earn-out consideration — — 43.0 43.0

Total financial liabilities $ — $ 0.2 $ 109.0 $ 109.2

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 fiscal year ended March 31, 2023.

In connection with the Nordeus acquisition we completed on June 1, 2021, our consideration included a contingent earn-out consideration arrangement that requires us to pay an aggregate of $ 153.0 in cash if Nordeus achieves certain performance measures over the 12 - and 24 -month periods following the closing.

We recorded $ 61.1 as the initial fair value of contingent earn-out consideration.

During the fiscal year ended March 31, 2023, we paid $ 70.1 related to these earn-out consideration arrangements.

During the fiscal year ended March 31, 2023, we recognized General and administrative expense of $ 26.5 within our 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 related to the second earn-out period to $ 65.4 and is recorded within Accrued expenses and other current liabilities in our Consolidated Balance Sheet as

of March 31, 2023.

The increase resulted from a higher probability of Nordeus achieving certain performance measures in the second 12-month period.

In connection with our acquisition of Popcore we completed on November 16, 2022, our consideration included a contingent earn-out consideration arrangement that requires us to pay an aggregate of $ 105.0 in cash if Popcore achieves certain performance measures over each of the three calendar years following the closing.

We recorded $ 23.3 as the initial fair value of contingent earn-out consideration.

At March 31, 2023, $ 25.6 is recorded within Other long-term liabilities in our Consolidated Balance Sheet.

The remaining contingent earn-out consideration liability of $ 1.2 recorded within Accrued expenses and other current liabilities and $ 1.7 recorded within Other long-term liabilities in our Consolidated Balance Sheet as of March 31, 2023, relates to immaterial earn-out arrangements from Zynga's historical acquisitions.

For these acquisitions, we estimated the acquisition date fair value of the contingent consideration obligations using a discounted cash flow model.

Nonrecurring fair value measurements

We hold equity investments in certain unconsolidated entities without a readily determinable fair value.

Our strategic investments represent less than a 20% ownership interest in each of the privately held entities, and we do not maintain power over or control of the entities.

These strategic investments represent less than a 20% ownership interest in each of the privately-held affiliates, and we do not maintain significant influence over or control of the entities.

We have elected the practical expedient in Topic 321, Investments-Equity Securities , to measure these investments at cost less any impairment, adjusted for observable price changes, if any.

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

At March 31, 2022, we held approximately $ 20,000 of such investments in Other assets within our Consolidated Balance Sheet.

During the fiscal year ended March 31, 2021, we recognized a gain on the sale of one of these investments of $ 40,588 .

The gain is reflected in Gain (loss) on long-term investments, net within our Consolidated Statements of Operations.

At March 31, 2023 and March 31, 2022, we held $ 8.0 and $ 20.0 , respectively, of such investments in Other assets within our Consolidated Balance Sheet.

See Note 9 - Goodwill and Intangible Assets, Net for intangible related fair value measurements.

See Note 13 - Leases for lease impairment related fair value measurements.

SHORT-TERM INVESTMENTS

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Corporate bonds 147.2 — ( 2.0 ) 145.2

US Treasuries 23,420 4 ( 10 ) 23,414

Commercial paper 125,390 — — 125,390

Certificates of Deposit 999 — — 999

Total Short-term investments $ 189.0 $ — $ ( 2.0 ) $ 187.0

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US Treasuries 23.4 — — 23.4

Certificates of Deposit 1.0 — — 1.0

Commercial Paper 125.4 — — 125.4

Asset-backed securities 469 1 — 470

Total Short-term investments $ 825.9 $ — $ ( 5.8 ) $ 820.1

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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.

We do not enter into derivative financial contracts

for speculative or trading purposes.

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.

We recognize derivative instruments as either assets or liabilities on our Consolidated Balance Sheets, and we measure those instruments at fair value.

We classify cash flows from derivative transactions as cash flows from operating activities in our Consolidated Statements of Cash Flows.

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Forward contracts to purchase foreign currencies 51.2 75.8

For the fiscal years ended March 31, 2022, 2021 and 2020, we recorded a gain of $ 5,887 , a loss of $ 3,584 , and a loss of $ 959 , respectively, related to foreign currency forward contracts in Interest and other, net on our Consolidated Statements of Operations.

Our derivative contracts are foreign currency exchange forward contracts that 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 fiscal years ended March 31, 2023, 2022 and 2021, we recorded a loss of $ 15.1 , a gain of $ 5.9 , and a loss of $ 3.6 , respectively, related to foreign currency forward contracts in Interest and other, net on our 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.

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.

Cross-currency Swaps

In August 2017, we entered into a cross-currency swap agreement related to an intercompany loan that was designated and accounted for as a cash flow hedge of foreign currency exchange risk.

During the three months ended June 30, 2020, we settled the intercompany loan and cross-currency swap, thereby discontinuing the cash flow hedge.

As a result, we reclassified $ 3,109 from Accumulated other comprehensive income (loss) to earnings as an increase to Interest and other, net on our Consolidated Statement of Operations.

We also received $ 7,420 in cash to settle our corresponding derivative asset.

Inventory balances by category are as follows:

Finished products $ 11,398 $ 16,941

Parts and supplies 1,826 801

Inventory $ 13,224 $ 17,742

Estimated product returns included in inventory at March 31, 2022 and 2021 were $ 21 and $ 186 , respectively.

SOFTWARE DEVELOPMENT COSTS AND LICENSES

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Amortization and impairment, net of stock-based compensation $ 268.3 $ 153.3 $ 144.3

The impairment charges related to (i) a decision not to proceed with further development of certain interactive entertainment software products, 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 fiscal year ended March 31, 2023, the impairment charges related to (i) a decision not to proceed with further development of certain interactive entertainment software products, 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.

As a result of government grants earned on qualified production spend to date, our software development costs and licenses were reduced by $ 108.1 and $ 96.9 as of March 31, 2023 and 2022, respectively.

Also, we had $ 0.0 and $ 10.0 current receivable within Prepaid expenses and other, and $ 256.8 and $ 256.5 non-current receivable within Other assets on our Consolidated Balance Sheets relating to such government grants as of March 31, 2023 and 2022, respectively.

In addition, within our Consolidated Statements of Operations, amortization of software development costs and licenses, which is a component of Cost of Revenue, for fiscal years ended March 31, 2023, 2022, and 2021, were reduced by $ 41.2 , $ 46.8 , and $ 43.3 , respectively, and Research and development expense was reduced by $ 4.5 for the fiscal year ended March 31, 2023, with no such reduction in fiscal years ended in March 31, 2022, and 2021 .

FIXED ASSETS, NET

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Computer software 102.0 67.2

Buildings 62.1 66.1

Furniture and fixtures 35.2 25.3

Office equipment 16.4 15.4

Buildings 66,075 857

506,144 386,509

Total $ 717.7 $ 506.1

accumulated depreciation ( 314.9 ) ( 264.1 )

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Balance at March 31, 2021 $ 535.3

Acquisition of Playdots, Inc.

Acquisition of Nordeus 115.5

Additions from immaterial acquisitions 35.3

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Balance at March 31, 2022 $ 674.6

Acquisition of Nordeus (see Note 22 )

Acquisition of Zynga ( see Note 20 )

Acquisition of Popcore ( see Note 20 )

Additions from immaterial acquisitions 26.5

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Value Weighted average useful life

Intellectual property $ 229,840 $ ( 42,308 ) $ 187,532 $ 41,077 $ ( 14,542 ) $ 26,535 6 years

Developed Game Technology $ 4,434.5 $ ( 744.0 ) $ 3,690.5 $ 122.5 $ ( 69.5 ) $ 53.0 7 years

Branding and Trade Names 395.2 ( 33.1 ) 362.1 11.1 ( 3.5 ) 7.6 12 years

Lease-in-place 2,296 ( 659 ) 1,637 — — — 4 years

Game Engine Technology 323.2 ( 73.5 ) 249.7 30.0 ( 13.7 ) 16.3 4 years

User Base 319.2 ( 274.4 ) 44.8 9.4 ( 8.9 ) 0.5 1 year

Developer Relationships 57.0 ( 12.2 ) 44.8 — — — 5 years

Advertising Technology 43.0 ( 12.3 ) 30.7 — — — 3 years

Customer Relationships 31.0 ( 5.3 ) 25.7 — — — 5 years

Intellectual Property 22.3 ( 18.2 ) 4.1 229.8 ( 42.3 ) 187.5 6 years

In Place Lease 1.9 ( 1.1 ) 0.8 2.3 ( 0.7 ) 1.6 4 years

Analytics Technology 30.1 ( 30.1 ) — 30.7 ( 30.7 ) — 0 years

Total intangible assets $ 435,772 $ ( 169,297 ) $ 266,475 $ 231,918 $ ( 110,327 ) $ 121,591 5 years

Amortization of intangible assets is included in our Consolidated Statements of Operations as follows:

Total intangible assets $ 5,657.4 $ ( 1,204.2 ) $ 4,453.2 $ 435.8 $ ( 169.3 ) $ 266.5

Amortization of intangible assets, including impairments, is included in our Consolidated Statements of Operations as follows:

Fiscal Year Ended March 31,

2023 2022 2021

Cost of goods sold $ 52,023 $ 21,199 $ 14,325

Cost of revenue $ 1,171.5 $ 52.0 $ 21.2

Selling and marketing 277.1 5.3 3.6

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Total amortization of intangible assets $ 1,506.7 $ 64.8 $ 32.2

Estimated future amortization of intangible assets that will be recorded in cost of goods sold and operating expenses for the years ending March 31, are as follows:

During the fiscal year ended March 31, 2023, we recorded impairment charges of $ 465.3 for acquisition-related Developed Game Technology intangible assets within Cost of revenue as a result of (i) a reduction in the forecasted performance of certain games due macroeconomic conditions and changes in our strategies for those games and (ii) our decision not to proceed with further development of a certain interactive entertainment software product.

The fair value of those intangible assets was measured using the multi-period excess earnings method, consistent with the approach used at acquisition.

Key assumptions and estimates used in deriving the fair value are forecasted revenue, EBITDA margins, long-term decay rate, and discount rate.

During the fiscal years ended March 31, 2022 and 2021, there were no impairment charges for intangible assets.

Estimated future amortization of intangible assets that will be recorded in cost of revenue and operating expenses for the years ending March 31, are as follows:

Fiscal Year Ended March 31, Amortization

2023 $ 52,036

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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Compensation and benefits 177.5 134.0

Licenses 81,138 84,330

Marketing and promotions 132.7 30.6

Deferred acquisition payments 82.7 78.6

Licenses 63.0 81.1

Refund liability 52.4 51.7

Marketing and promotions 30,616 32,591

Tax payable 33.0 14.1

Interest payable 29.6 —

Sales tax liability 14.0 17.2

Other 130.1 51.9

Accrued expenses and other current liabilities $ 1,225.7 $ 1,074.9

The components of Long-term debt, net on our Consolidated Balance Sheet were as follows:

Annual Interest Rate Maturity Date March 31, 2023 Fair Value (Level 2)

2025 Notes 3.55 % April 14, 2025 $ 600.0 $ 583.8

2027 Notes 3.70 % April 14, 2027 600.0 580.9

2032 Notes 4.00 % April 14, 2032 500.0 460.6

2024 Convertible Notes 0.25 % June 1, 2024 20.8 20.8

2026 Convertible Notes — % December 15, 2026 23.3 23.3

Total $ 1,744.1 $ 1,669.4

Unamortized discount and issuance costs ( 11.1 )

Long-term debt, net $ 1,733.0

The components of Short-term debt, net on our Consolidated Balance Sheet were as follows:

Annual Interest Rate Maturity Date March 31, 2023 Fair Value (Level 2)

2024 Notes 3.30 % March 28, 2024 $ 1,000.0 $ 978.2

Term Loan 3.60 % June 21, 2023 350.0 350.0

Total $ 1,350.0 $ 1,328.2

Unamortized discount and issuance costs ( 3.2 )

Short-term debt, net $ 1,346.8

The interest expense as it relates to our debt is recorded within Interest and other, net in our Consolidated Statements of Operations for the fiscal year ended March 31, 2023 and was as follows:

Fiscal Year Ended March 31,

2024 Notes $ 31.5

2025 Notes 20.5

2027 Notes 21.4

2032 Notes 19.2

Term Loan 11.9

2022 Credit Agreement 4.1

On February 8, 2019, we entered into an unsecured credit agreement (the “Credit Agreement”) , and on June 28, 2021, we amended our unsecured Credit Agreement solely to increase the commitments under the facility by $ 50,000 (as amended, the “Credit Agreement”) that runs through February 8, 2024.

Total $ 108.6

The following table outlines the aggregate amount of maturities of our borrowings, as of March 31, 2023:

Fiscal Year Ended March 31, Maturities

2024 $ 1,350.0

Thereafter 500.0

Total 3,100.8

Fair Value Adjustments ( 6.7 )

Total Face Value $ 3,094.1

During the fiscal year ended March 31, 2022, in connection with our acquisition of Zynga (refer to Note 2 0 - Acquisitions ), we received a bridge loan commitment of $ 2,700.0 .

The bridge loan commitment was terminated in April 2022 in connection with our Senior Notes debt offering discussed below.

During the fiscal year ended March 31, 2023, we recognized expense related to interest and fees of $ 6.1 related to the bridge loan commitment within Interest and other, net in our Consolidated Statements of Operations.

At April 30, 2022, all deferred financing costs related to the bridge loan commitment were fully amortized.

On April 14, 2022, we completed our offering and sale of 2,700.00 aggregate principal amount of our senior notes, consisting of $ 1,000.0 principal amount of our 3.300 % Senior Notes due 2024 (the “2024 Notes”), $ 600.0 principal amount of our 3.550 % Senior Notes due 2025 (the “2025 Notes”), $ 600.0 principal amount of our 3.700 % Senior Notes due 2027 (the “2027 Notes”), and $ 500.0 principal amount of our 4.000 % Senior Notes due 2032 (the “2032 Notes” and, together with the 2024 Notes, the 2025 Notes and the 2027 Notes, the “Senior Notes”).

The Senior Notes were issued under an indenture, dated as of April 14, 2022 (the “Base Indenture”), between the Company and The Bank of New York Mellon, as trustee (the “Trustee”) and (i) a first supplemental indenture, with respect to the 2024 Notes, (ii) a second supplemental indenture, with respect to the 2025 Notes, (iii) a third supplemental indenture, with respect to the 2027 Notes and (iv) a fourth supplemental indenture, with respect to the 2032 Notes (collectively, the “Supplemental Indentures” and together with the Base Indenture, the “Indenture”), each dated as of April 14, 2022, between the Company and the Trustee.

The Senior Notes are the Company’s senior unsecured obligations and rank equally with all of our other existing and future unsubordinated obligations.

We will pay interest on the 2024 Notes semi-annually on March 28 and September 28 of each year, commencing September 28, 2022.

During the fiscal year ended March 31, 2023, we made interest payments of $ 31.5 on the 2024 Notes.

We will pay interest on each of the 2025 Notes, 2027 Notes, and 2032 Notes semi-annually on April 14 and October 14 of each year, commencing October 14, 2022.

During the fiscal year ended March 31, 2023, we made interest payments of $ 31.8 on the 2025 Notes, 2027 Notes, and 2032 Notes.

The proceeds were used to finance a portion of our acquisition of Zynga.

The Senior Notes are not entitled to any sinking fund payments.

We may redeem each series of the Senior Notes at any time in whole or from time to time in part at the applicable redemption prices set forth in each Supplemental Indenture.

Upon the occurrence of a Change of Control Repurchase Event (as defined in each of the Supplemental Indentures) with respect to a series of the Senior Notes, each holder of the Senior Notes of such series will have the right to require the Company to purchase that holder’s Notes of such series at a price equal to 101 % of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase, unless the Company has exercised its option to redeem all the Senior Notes.

In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company, all outstanding Senior Notes will become due and payable immediately.

If any other event of default specified in the Indenture occurs and is continuing with respect to any series of the Senior Notes, the Trustee or the holders of at least 25 % in aggregate principal amount of that series of the outstanding Notes may declare the principal of such series of Senior Notes immediately due and payable.

The Indenture contains certain limitations on the ability of the Company and its subsidiaries to grant liens without equally securing the Senior Notes, or to enter into certain sale and lease-back transactions.

These covenants are subject to a number of important exceptions and limitations, as further provided in the Indenture.

Debt issuance costs of $ 19.1 and original issuance discount of $ 1.3 were incurred in connection with the Senior Notes.

These debt issuance costs and original issuance discount are included as a reduction of the debt within Long-term debt, net and Short-term debt, net on our Consolidated Balance Sheet and will be amortized into Interest and other, net in our Consolidated Statements of Operations over the contractual term of the Senior Notes.

During the fiscal year ended March 31, 2023, we recognized $ 5.5 of amortization of debt issuance costs and $ 0.4 of amortization of the original issuance discount.

Credit Agreement

On May 23, 2022, we entered into a new unsecured Credit Agreement (the "2022 Credit Agreement"), which replaced in its entirety the Company's prior Credit Agreement, dated as of February 8, 2019, which was paid off in full and terminated.

The 2022 Credit Agreement provides for an unsecured five-year revolving credit facility with commitments of $ 500.0 , including sublimits for (i) the issuance of letters of credit in an aggregate face amount of up to $ 100.0 and (ii) borrowings and letters of credit denominated in Pounds Sterling, Euros, and Canadian Dollars in an aggregate principal amount of up to $ 100.0 .

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 ( 3.50 % at March 31, 2022) or (b) 1.125 % to 1.750 % above LIBOR (approximately 0.45 % at March 31, 2022), which rates are determined by reference to our consolidated total net leverage ratio.

We had no outstanding borrowings at March 31, 2022 and March 31, 2021.

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

In addition, the 2022 Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional amount not to exceed the greater of $ 250.0 and 35.0 % of the Company's Consolidated Adjusted EBITDA (as defined in the 2022 Credit Agreement).

Loans under the 2022 Credit Agreement will bear interest at a rate of (a) 0.000 % to 0.625 % above an alternate base rate ( 8.00 % at March 31, 2023) or (b) 1.000 % to 1.625 % above Secured Overnight Financing Rate ("SOFR"), approximately 4.80 % at March 31, 2023, which rates are determined by the Company's credit rating.

The 2022 Credit Agreement also includes, among other terms and conditions, a maximum leverage ratio covenant, as well as customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or substantially all assets, in each case subject to certain exceptions and baskets.

In addition, the 2022 Credit Agreement provides for events of default customary for a credit facility of this size and type, including, among others, non-payment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency, cross-defaults to material indebtedness, and material judgment defaults (subject to certain limitations and cure periods).

Upon execution of the 2022 Credit Agreement, we incurred $ 3.5 of debt issuance costs that were capitalized within Other assets on our Consolidated Balance Sheet and will be amortized on a straight-line basis over the five-year term of the 2022 Credit Agreement, with the expense recorded within Interest and other, net in our Consolidated Statements of Operations.

During the fiscal year ended March 31, 2023, we amortized $ 0.6 of these debt issuance costs.

On June 22, 2022, we drew down $ 200.0 at approximately 3.28 % from our facility under the 2022 Credit Agreement, which constitute senior unsecured indebtedness of the Company, ranking equally with all of our other existing and future senior unsecured unsubordinated obligations, and recorded interest within Interest and other, net in our Consolidated Statement of Operations.

This borrowing has a maturity date of May 23, 2027.

On September 22, 2022, we repriced our outstanding borrowing at approximately 4.84 %.

The proceeds were used to finance a portion of the repurchase of the Convertible Notes (see below).

In December 2022, we fully repaid the $ 200.0 drawdown.

As of March 31, 2023, there were no borrowings under the 2022 Credit Agreement, and we had approximately $ 499.5 available for additional borrowings.

During the fiscal year ended March 31, 2023, we made interest payments of $ 4.1 .

Information related to availability on our respective credit agreements for each period was as follows:

March 31, 2023 March 31, 2022

Available borrowings $ 499.5 $ 247.5

Outstanding letters of credit 2.8 2.5

We recorded interest expense and fees related to the Credit Agreement of $ 450 , $ 355 and $ 275 , for the fiscal years ended March 31, 2022, 2021 and 2020.

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;

dispose of assets outside the ordinary course;

acquire, merge or consolidate with or into another person or entity;

create, incur or allow any lien on any of its property;

make investments;

or pay dividends or make distributions, in each case subject to certain exceptions.

In addition, the Credit Agreement provides for certain events of default such as nonpayment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency and default on indebtedness held by third parties (subject to certain limitations and cure periods).

During the fiscal year ended March 31, 2022, in connection with our pending acquisition of Zynga, we received a bridge loan commitment of $ 2.7 billion from J.P.

Morgan and certain other lenders and recognized expense related to interest and fees of $ 6,075 within Interest and other, net in our Consolidated Statements of Operations.

At March 31, 2022, $ 6,075 of deferred financing costs remained within Prepaid expenses and other on our Consolidated Balance Sheet.

The bridge loan was terminated in April 2022 as a result of our debt offering.

Refer to Note 23 - Subsequent Events .

EARNINGS PER SHARE ("EPS")

The following table sets forth the computation of basic and diluted EPS (in thousands except per share amounts):

On June 22, 2022, we entered into an unsecured 364 -Day Term Loan Credit Agreement ("Term Loan").

The Term Loan provides for an unsecured 364 -day term loan credit facility in the aggregate principal amount of $ 350.0 and matures on June 21, 2023, and will bear interest at our election at a margin of (a) 0.000 % to 0.375 % above an alternate base rate (defined on the basis of prime rate) or (b) 0.750 % to 1.375 % above SOFR, which rates are determined by reference to our credit rating.

The Term Loan constitutes senior unsecured indebtedness of the Company, ranking equally with all of our other existing and future senior unsecured unsubordinated obligations.

The Term Loan also includes, among other terms and conditions, a maximum leverage ratio covenant, as well as customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur subsidiary indebtedness, grant liens, and dispose of all or substantially all assets, in each case subject to certain exceptions and baskets.

In addition, the Term Loan provides for events of default customary for a credit facility of this size and type, including, among others, non-payment of principal and interest when due thereunder, breaches of representations and warranties, noncompliance with covenants, acts of insolvency, cross-defaults to material indebtedness, and material judgment defaults (subject to certain limitations and cure periods).

We fully drew down on the Term Loan on June 22, 2022 at approximately 3.60 %.

We repriced our outstanding borrowing at approximately 5.62 % in December 2022 and 5.91 % in March 2023.

The proceeds were used to finance a portion of the repurchase of the Convertible Notes (see below).

During the fiscal year ended March 31, 2023, we made interest payments of $ 11.6 .

Convertibles Notes

In conjunction with the acquisition of Zynga on May 23, 2022 (refer to Note 2 0 - Acquisitions ), we entered into (a) the First Supplemental Indenture (the “2024 Supplemental Indenture”) to the Indenture, dated as of June 14, 2019 (the “2024 Indenture”), between Zynga and Computershare Trust Company, N.A.

(as successor to Wells Fargo Bank, National Association) (the “Trustee”), relating to Zynga’s 0.25 % Convertible Senior Notes due 2024 (the “2024 Convertible Notes”), and (b) the First Supplemental Indenture (the “2026 Supplemental Indenture” and, together with the 2024 Supplemental Indenture, the “Supplemental Indentures”) to the Indenture, dated as of December 17, 2020 (the “2026 Indenture” and, together with the 2024 Indenture, the “Indentures”), between Zynga and the Trustee, relating to Zynga’s 0.00 % Convertible Senior Notes due 2026 (the “2026 Convertible Notes” and, together with the 2024 Convertible Notes, the “Convertible Notes”).

As of the closing date of the acquisition, approximately $ 690.0 aggregate principal amount of the 2024 Convertible Notes were outstanding and approximately $ 874.5 aggregate principal amount of the 2026 Convertible Notes were outstanding.

Following the acquisition and according to the Supplemental Indentures, we assumed all of Zynga’s rights and obligations under the Indentures, and the Company guaranteed the payment and other obligations of Zynga under the Convertible Notes.

As a result of our acquisition of Zynga, the right to convert each one thousand dollar principal amount of such Convertible Notes into shares of Zynga common stock was changed into a right to convert such principal amount of such Convertible Notes into the number of units of Reference Property equal to the conversion rate in effect immediately prior to the closing of the Zynga Acquisition, in each case pursuant to the terms and procedures set forth in the applicable Indenture.

A unit of Reference Property is defined in each Indenture as 0.0406 shares of Take-Two common stock and $ 3.50 in cash, without interest, plus cash in lieu of any fractional shares of Take-Two common stock.

The 2024 Convertible Notes and 2026 Convertible Notes mature on June 1, 2024, and December 15, 2026, respectively, unless earlier converted, redeemed, or repurchased in accordance with their terms, respectively, prior to the maturity date.

Interest is payable semiannually on the 2024 Convertible Notes in arrears on March 1 and September 1 of each year.

The 2026 Convertible Notes do not bear regular interest, and the principal amount does not accrete.

The acquisition of Zynga constituted a Fundamental Change, a Make-Whole Fundamental Change, and a Share Exchange Event (each as defined in the Indentures) under the Indentures.

The effective date of the Fundamental Change, Make-Whole Fundamental Change and Share Exchange Event in respect of the Convertible Notes was May 23, 2022 (the “Convertible Notes Effective Date”), and the related tender and conversion periods expired on June 22, 2022.

As a result, each holder of Convertible Notes had the right to tender its Convertible Notes to the Company for cash or surrender its Convertible

Notes for conversion into the Reference Property at the applicable conversion rate, in each case pursuant to the terms and procedures set forth in the applicable Indenture.

As of the expiration of the Fundamental Change, Make-Whole Fundamental Change, and Share Exchange Event, (a) $ 0.3 aggregate principal amount of the 2024 Convertible Notes and (b) $ 845.1 aggregate principal amount of the 2026 Convertible Notes were tendered for cash.

In addition, (a) $ 668.3 aggregate principal amount of the 2024 Convertible Notes, and (b) no 2026 Convertible Notes were surrendered for conversion into the applicable Reference Property.

In total, we paid $ 321.6 for the tendered or converted 2024 Convertible Notes, including interest, and $ 845.1 for the tendered 2026 Convertible Notes in cash, and we issued 3.7 shares of our common stock upon the conversion of the 2024 Convertible Notes.

After settlement of all Convertible Notes tendered or surrendered for conversion, $ 21.4 aggregate principal amount of the 2024 Convertible Notes remained outstanding and $ 29.4 aggregate principal amount of the 2026 Convertible Notes remained outstanding at March 31, 2023.

The 2024 Convertible Notes and 2026 Convertible Notes constitute senior unsecured indebtedness of Zynga, ranking pari passu with all of our other existing and future senior unsecured unsubordinated obligations of Zynga.

As a result the 2024 Convertible Notes and 2026 Convertible Notes are structurally senior to the indebtedness of the Company as to Zynga, its subsidiaries, and their respective assets.

As noted above, the Company also guaranteed the payment and other obligations of Zynga under the Convertible Notes.

The Company's guarantees of the 2024 Convertible Notes and 2026 Convertible Notes are the Company's senior unsecured obligations and rank equally with all of the Company's other existing and future senior unsecured unsubordinated obligations.

Under the terms of the applicable Indentures, prior to the close of business on the business day immediately preceding March 1, 2024 with respect to the 2024 Convertible Notes and September 15, 2026 with respect to the 2026 Convertible Notes, the Convertible Notes will be convertible only under the following circumstances:

• during any calendar quarter, if the value of a unit of Reference Property (based on the last reported sales price of our common stock), for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price of the applicable series of the 2024 Convertible Notes or 2026 Convertible Notes, respectively, on each applicable trading day;

• during the five business-day period after any five consecutive trading-day period in which the trading price per one thousand dollar principal amount of each applicable series of the 2024 Convertible Notes or 2026 Convertible Notes for such trading day was less than 98 % of the product of the value of a unit of Reference Property (based on the last reported sale price of our common stock) and the conversion rate of the applicable series of the 2024 Convertible Notes or 2026 Convertible Notes, respectively, on each such trading day;

• if we call the 2024 Convertible Notes or 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the respective redemption date; or

• upon the occurrence of specified corporate events described in the respective Indentures.

Upon any conversion, holders will receive either cash or a combination of cash and shares of Take-Two common stock, at our election.

As of March 31, 2023, the conditions allowing holders of the Convertible Notes to convert their respective series of the Convertible Notes have not been met, and, therefore, both the Convertible Notes are not yet convertible.

We have elected to account for these Convertible Notes, which are considered derivatives, using the fair value option (Level 2) under ASC 825, as the Convertible Notes were initially recognized at fair value under the acquisition method of accounting in connection with the Zynga Acquisition (refer to Note 2 0 - Acquisitions ) and we do not expect significant fluctuations in fair value through maturity.

We initially recorded $ 778.6 as the acquisition date fair value for the 2024 Convertible Notes and $ 874.5 for the 2026 Convertible Notes.

The fair value was determined as the expected cash payment and value of shares to be issued to settle the Convertible Notes.

As of March 31, 2023, we recorded $ 20.8 as the fair value of the remaining outstanding 2024 Convertible Notes, and $ 23.3 as the fair value of the remaining outstanding 2026 Convertible Notes, within Long-term debt, net in our Consolidated Balance Sheet.

During the fiscal year ended March 31, 2023, we recognized a loss of $ 37.6 within (Loss) gain on fair value adjustments, net in our Consolidated Statements of Operations, which includes the loss recognized on the converted Convertible Notes.

In connection with the Convertible Notes, Zynga also previously entered into privately negotiated Capped Call options with certain counterparties.

These Capped Call options were intended to reduce the potential economic dilution of Zynga shares upon any conversion of the Convertible Notes and/or offset any cash payments made in excess of the principal amount of converted notes with such reduction and/or offset, as the case might have been, subject to a maximum based on the cap price.

Following the acquisition of Zynga, we entered into Termination Agreements with each counterparty related to the acquired Capped Call arrangements to be settled in cash.

Pursuant to the terms of the Termination Agreements, the Capped Call options will be terminated over a period of time specified in each Termination Agreement and each counterparty will owe a cash payment to the Company, as applicable, as a result of the termination of the Capped Call options that will be calculated based on their fair market value calculated by each counterparty during a termination valuation period.

We have accounted for these Capped Calls as derivatives under ASC 815.

We initially recorded $ 131.3 as the acquisition date fair value of these Capped Calls, and, as of June 30, 2022, the fair value of $ 140.1 is recorded on our Consolidated Balance Sheet.

The fair value (Level 2), in each instance, was determined based on negotiated termination agreements with the counterparties, which are dependent on our stock price over a certain period of time as further defined in the respective agreements.

During the fiscal year ended March 31, 2023, we recognized a gain of $ 8.8 within (Loss) gain on fair value adjustments, net in our Consolidated Statements of Operations.

In July 2022, we received $ 140.1 in cash for settlement of these Capped Calls.

(LOSS) EARNINGS PER SHARE ("EPS")

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

Fiscal Year Ended March 31,

2023 2022 2021

Computation of Basic earnings per share:

Net income $ 418,022 $ 588,886 $ 404,459

Computation of Basic (loss) earnings per share:

Net (loss) income $ ( 1,124.7 ) $ 418.0 $ 588.9

Weighted average common shares outstanding—basic 159.9 115.5 114.6

Basic earnings per share $ 3.62 $ 5.14 $ 3.58

Computation of Diluted earnings per share:

Net income $ 418,022 $ 588,886 $ 404,459

Basic (loss) earnings per share ( 7.03 ) 3.62 5.14

Computation of Diluted (loss) earnings per share:

Net (loss) income $ ( 1,124.7 ) $ 418.0 $ 588.9

Weighted average common shares outstanding—basic 159.9 115.5 114.6

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Weighted average common shares outstanding—diluted 159.9 116.8 115.7

Diluted earnings per share $ 3.58 $ 5.09 $ 3.54

Diluted (loss) earnings per share $ ( 7.03 ) $ 3.58 $ 5.09

We incurred a net loss for the fiscal year ended March 31, 2023;

therefore, the diluted weighted average shares outstanding exclude the effect of unvested common stock equivalents because their effect would be antidilutive.

We had 1.6 potentially dilutive shares from share-based awards and 0.6 of shares from Convertible Notes that are excluded due to the net loss for the period.

Our lease arrangements are primarily for (1) corporate, administrative, and development studio offices and (2) data centers and server equipment.

Our existing leases have remaining lease terms ranging from one to sixteen years .

Our existing leases have remaining lease terms ranging from one to fifteen years.

In certain instances, such leases include one or more options to renew, with renewal terms that generally extend the lease term by one to five years for each option.

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Short term lease costs 4.1 1.4 1.1

As part of our acquisition of Zynga (refer to Note 20 - Acquisitions ), we recognized an ROU asset related to Zynga's office space lease in San Francisco, which is available for sublease and not currently used by us.

Due to the continued deterioration of the sublease market, unsuccessful negotiations with a potential sub-tenant, and our decision to change our sublease marketing strategy, we recognized a $ 30.0 impairment loss related to the ROU asset during the fourth quarter of fiscal year 2023, which is included in General and administrative expense within our Consolidated Statement of Operations and in the Operating lease costs in the table above.

The fair value of the San Francisco Office was estimated using a risk-adjusted, discounted cash flow model with Level 3 inputs.

The significant assumptions used in estimating the fair value included the projected sublease income over the remaining lease term, expected downtime prior to the commencement of future subleases, expected rent concessions offered to future tenants and discount rates that reflected the level of risk associated with these future cash flows.

Fiscal Year Ended March 31,

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ROU assets obtained in exchange for lease obligations 145.3 74.0 34.6

Fiscal Year Ended March 31,

2023 2022 2021

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For the years ending March 31,

2023 $ 47,905

Thereafter 201.3

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Total lease liabilities $ 407.2

As of March 31, 2023, we have entered into facility leases that have not yet commenced with future lease payments of approximately $ 13.6 .

These leases are expected to commence within the next twelve months and will have lease terms ranging from five to seven years .

COMMITMENTS AND CONTINGENCIES

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These obligations are primarily related to agreements to purchase services that are enforceable and legally binding on us that specifies all significant terms, including fixed, minimum or variable pricing provisions;

and the approximate timing of the transactions, expiring at various times through March 2027.

and the approximate timing of the transactions, expiring at various times through October 2027.

Employee Savings Plans:

8 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.

Components of income before income taxes are as follows:

Components of (Loss) income before income taxes are as follows:

Fiscal Year Ended March 31,

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Foreign ( 401.1 ) 107.9 209.8

Income before income taxes $ 465,398 $ 677,816 $ 458,439

(Loss) income before income taxes $ ( 1,338.1 ) $ 465.4 $ 677.8

Provision for (benefit from) current and deferred income taxes consists of the following:

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Total deferred income taxes ( 384.9 ) 11.9 37.1

Provision for income taxes $ 47,376 $ 88,930 $ 53,980

(Benefit from) provision for income taxes $ ( 213.4 ) $ 47.4 $ 88.9

A reconciliation of our effective tax rate to the U.S.

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Valuation allowance—foreign ( 0.1 ) % 0.4 % — %

0.4 % — % 7.3 %

Nondeductible compensation ( 0.9 ) % 0.4 % 0.3 %

Global intangible low-taxed income ( 3.1 ) % 0.1 % 0.3 %

Foreign-derived intangible income 1.8 % ( 0.9 ) % ( 0.8 ) %

Change in reserves ( 0.1 ) % ( 0.9 ) % ( 0.4 ) %

Other 0.8 % 0.8 % 1.6 %

( 1.6 ) % 0.6 % 0.8 %

Effective tax rate 15.9 % 10.2 % 13.1 %

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income tax rates.

Fiscal year ended March 31, 2020 includes the impact of the reversal of a net deferred tax asset of $ 19,826 related to the effects of stock-based compensation from our intercompany cost-sharing arrangements due to an appeals court decision issued in Altera Corp.

Commissioner.

(2) Fiscal year ended March 31, 2022 includes effects of an increase of the deferred tax asset related to the Federal Act on Tax Reform and AVH Financing ("TRAF") enacted on January 1, 2020.

Fiscal year ended March 31, 2020 includes effects of a deferred tax asset and valuation allowance associated with a tax basis step up received in Switzerland related to TRAF.

(2) Fiscal years ended March 31, 2023 and March 31, 2022 include effects of an increase of the deferred tax asset related to the Federal Act on Tax Reform and AVH Financing ("TRAF") enacted on January 1, 2020.

(3) Tax benefits were recorded for fiscal years ended March 31, 2023, 2022, and 2021 attributable to certain tax credits related to software development activities.

(4) Includes nondeductible expense of $ 8.2 relating to loss on the redemption of convertible debt for the fiscal year ended March 31, 2023.

The effects of temporary differences that gave rise to our deferred tax assets and liabilities were as follows:

Deferred tax assets:

Accrued compensation expense $ 106,034 $ 132,794

Equity-based compensation 88,407 60,012

Tax credit carryforward $ 159.5 $ 71.6

Tax basis step up related to TRAF 58,462 45,266

Capitalized development costs, software and depreciation 157.8 —

Equity-based compensation 109.8 88.4

Accrued compensation expense 96.6 106.0

Operating lease liabilities 90.6 54.3

Tax basis step up related to TRAF 79.1 58.5

Net operating loss carryforward 50.3 10.3

Deferred revenue — 13.0

Business reorganization 628 401

Other 26.0 12.0

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Deferred tax liabilities:

Capitalized software and depreciation $ ( 145,059 ) $ ( 99,673 )

Right of use assets ( 50,012 ) ( 40,391 )

Intangible amortization $ ( 841.0 ) $ ( 45.1 )

Right of use assets ( 64.7 ) ( 50.0 )

Deferred revenue ( 15.0 ) —

Other ( 1,846 ) ( 2,773 )

Capitalized software and depreciation — ( 145.1 )

Total deferred tax liabilities ( 920.7 ) ( 240.2 )

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The valuation allowance is primarily attributable to deferred tax assets for which no benefit is provided due to uncertainty with respect to their realization.

At March 31, 2022, we had domestic net operating loss carryforwards totaling $ 32,955 of which $ 13,131 will expire in 2023 to 2028, $ 13,210 will expire from 2029 to 2032, and $ 6,614 will expire in 2035 to 2041.

At March 31, 2023, we had domestic net operating loss carryforwards totaling $ 652.5 of which $ 53.7 will expire from 2024 to 2029, $ 217.5 will expire from 2030 to 2040, $ 179.9 will expire from 2041 to 2043, and the remainder will be carried forward indefinitely.

In addition, we had foreign net operating loss carryforwards of $ 84.5 , of which $ 39.4 will expire from 2026 to 2030, $ 7.2 will expire from 2041 to 2043 and the remainder may be carried forward indefinitely.

At March 31, 2022, we had domestic tax credit carryforwards totaling $ 194,517 , of which $ 47,743 expire in 2039 to 2043, and the remainder may be carried forward indefinitely.

At March 31, 2023, we had domestic tax credit carryforwards totaling $ 359.9 , of which $ 8.4 expire in 2024 to 2028, $ 67.3 expire from 2032 to 2042, and the remainder may be carried forward indefinitely.

The total amount of undistributed earnings of foreign subsidiaries was approximately $ 64.6 at March 31, 2023 and $ 392.6 at March 31, 2022.

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Prior year tax positions (1)

109.7 4.2 21.0

Reduction of prior year tax positions ( 26.3 ) — ( 1.0 )

1 unchanged sentence

Balance, end of period $ 274.7 $ 164.8 $ 158.3

(1) Increase in prior year tax positions of $ 109.9 relates to purchase accounting for the Zynga acquisition.

We believe that we have provided for any reasonably foreseeable outcomes related to our tax audits and that any settlement will not have a material adverse effect on our consolidated financial statements.

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The aggregate number of shares issuable under the 2017 Plan is 29.3 , subject to adjustment as set forth in the 2017 Plan, and, as of March 31, 2023, there were approximately 15.5 shares available for issuance.

The 2017 Plan is administered by the Compensation Committee of the Board of Directors and allows for awards of restricted stock units and other stock-based awards of our common stock to employees and non-employees, including to ZelnickMedia in connection with their contract to provide executive management service to us.

The 2017 Plan is administered by the Compensation Committee of the Board of Directors and allows for awards of restricted stock units and other stock-based awards of our common stock to employees and non-employees, including to ZMC in connection with their contract to provide executive management service to us.

Subject to the provisions of the plans, the Board of Directors, or any Committee appointed by the Board of Directors, has the authority to determine the individuals to whom the equity awards are to be granted, the number of shares to be covered by each equity award, the vesting period, restrictions, if any, on the equity award and the terms and conditions of the equity award.

4 unchanged sentences

2023 2022 2021

Cost of goods sold $ 48,381 $ 8,707 $ 154,031

Cost of revenue $ ( 9.5 ) $ 48.4 $ 8.7

Selling and marketing 95.2 30.0 18.3

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For the fiscal years ended March 31, 2023, 2022 and 2021, the total fair values of restricted stock units that vested were $ 321.8 , $ 208.6 and $ 205.9 , respectively.

In connection with the Zynga Acquisition (see Note 20 - Acquisitions ), (i) the outstanding and unexercised options to purchase Zynga common stock were assumed by the Company and automatically converted into options exercisable for shares of Take-Two common stock (the “Converted Options”), (ii) the issued and outstanding restricted stock unit awards with respect to Zynga common stock were assumed by the Company and automatically converted into a Take-Two restricted stock unit award with respect to shares of Take-Two common stock (the “Converted RSUs”), and (iii) the issued and outstanding performance stock unit awards with respect to Zynga common stock were assumed by the Company and automatically converted into a Take-Two restricted stock unit award with respect to shares of Take-Two common stock (the “Converted PSUs” and together with the Converted Options and the Converted RSUs, the “Converted Awards”).

As a result, we issued replacement equity options and PSU/RSU awards of 1.5 and 4.2 , respectively.

The portion of the fair value related to pre-combination services of $ 151.7 was included in the purchase price, and $ 28.6 was recognized as day-one post-combination expense for acceleration of awards, while the remaining fair value will be recognized over the remaining service periods.

As of March 31, 2023, the future expense for the Converted RSUs and Converted PSUs was approximately $ 236.7 , which will be recognized over a weighted average service period of approximately 1.4 years.

As of March 31, 2023, the future expense for the Converted Options was approximately $ 0.9 , which will be recognized over a weighted average service period of approximately 0.7 years.

Restricted Stock Units

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Certain restricted stock units granted to key officers, senior-level employees, or key employees vest based on performance conditions, primarily related to performance metrics around certain of our titles.

ZelnickMedia Non-Employee Awards

In connection with the 2017 Management Agreement, we granted restricted stock units to ZelnickMedia (see Note 3 - Management Agreement ) as follows:

ZMC Non-Employee Awards

In connection with the 2017 Management Agreement and the 2022 Management Agreement, we granted restricted stock units (in thousands) to ZMC (see Note 3 - Management Agreement ) as follows:

Fiscal Year Ended March 31,

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(1) Represents the maximum number of shares eligible to vest.

Time-based restricted stock units granted in fiscal year 2022 will vest on April 13, 2023, provided that the 2017 Management Agreement or the 2022 Management Agreement, as applicable, has not been terminated prior to such vesting date, and those granted in fiscal 2021 vested on April 13, 2022.

Market-based restricted stock units granted in fiscal year 2022 are eligible to vest on April 13, 2023, provided that the 2017 Management Agreement or the 2022 Management Agreement, as applicable, has not been terminated prior to such vesting date, and those granted in fiscal 2021 vested on April 13, 2022.

Market-based restricted stock units are eligible to vest based on our Total Shareholder Return (as defined in the relevant grant agreement) relative to the Total Shareholder Return (as defined in the relevant grant agreement) of the companies that constitute the NASDAQ Composite Index as of the grant date measured over a two-year period.

To earn the target number of market-based restricted stock units (which represents 50 % of the number of the market-based restricted stock units set forth in the table above), the Company must perform at the 50th percentile, with the maximum number of market-based restricted stock units earned if the Company performs at least at the 75th percentile.

Performance-based restricted stock units granted in fiscal year 2022 are eligible to vest on April 13, 2023, provided that the 2017 Management Agreement or the 2022 Management Agreement, as applicable, has not been terminated prior to such vesting date, and those granted in fiscal 2021 vested on April 13, 2022.

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.

Time-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement will vest on April 13, 2024, and those granted in fiscal year 2022 vested on April 13, 2023.

Time-based restricted stock units granted in fiscal year 2023 pursuant to the 2022 Management Agreement will vest on June 1, 2023, June 1, 2024, and June 1, 2025.

Market-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement are eligible to vest on April 13, 2024, and those granted in fiscal year 2022 that were eligible to vest vested on April 13, 2023.

Market-based restricted stock units granted in fiscal year 2023 pursuant to the 2022 Management Agreement are eligible to vest on June 1, 2024 and June 1, 2025.

Market-based restricted stock units are eligible to vest based on the Company's Total Shareholder Return (as defined in the relevant grant agreement) relative to the Total Shareholder Return (as defined in the relevant grant agreement) of the companies that constitute either the NASDAQ Composite Index under the 2017 Management Agreement or the NASDAQ 100 index under the 2022 Management Agreement (as defined in the relevant grant agreement) as of the grant date measured over a two-year period or three-year period, as applicable.

To earn the target number of market-based restricted stock units (which represents 50 % of the number of the market-based restricted stock units set forth in the table above), the Company must perform at the 50 th percentile, with the maximum number of market-based restricted stock units earned if the Company performs at the 75 th percentile.

Performance-based restricted stock units granted in fiscal year 2023 pursuant to the 2017 Management Agreement are eligible to vest on April 13, 2024, and those granted in fiscal year 2022 vested on April 13, 2023.

Performance-based restricted stock units granted in fiscal year 2023 pursuant to the 2022 Management Agreement are eligible to vest on June 1, 2024 and June 1, 2025.

The performance-based restricted stock units, of which certain are tied to "IP" and "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" measured over a two-year period or "RCS" measured over a two - or three-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).

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.

Certain performance metrics have been achieved as of March 31, 2022 for the "IP" and "RCS" performance-based restricted stock units granted in fiscal year 2021 and fiscal year 2022.

The unvested portion of time-based, market-based and performance-based restricted stock units held by ZelnickMedia as of March 31, 2022 and 2021 were 449 and 588 , respectively.

During the fiscal year ended March 31, 2022, 315 restricted stock units previously granted to ZelnickMedia vested and 0 restricted stock units were forfeited by ZelnickMedia.

The unvested portion of time-based, market-based and performance-based restricted stock units held by ZMC as of March 31, 2023 and 2022 were 1.1 and 0.4 , respectively.

During the fiscal year ended March 31, 2023, 0.2 restricted stock units previously granted to ZMC vested, and 0.1 restricted stock units were forfeited by ZMC.

Fair Value of Stock-Based Awards

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The estimated value, based on the closing price of our stock on the grant date, of time-based restricted stock units granted to employees during the fiscal years ended March 31, 2023, 2022 and 2021 was $ 118.17 , $ 180.97 and $ 171.58 per share, respectively.

For the fiscal years ended March 31, 2022, 2021 and 2020, the estimated value, based on the closing price of our stock on the grant date, of time-based restricted stock awards granted to ZelnickMedia was $ 182.66 , $ 120.00 and $ 92.65 per share, respectively.

The following table summarizes the activity in non-vested restricted stock units to employees and ZelnickMedia under our stock-based compensation plans with time-based restricted stock awards presented at 100% of target number of shares that may potentially vest:

(in thousands) Weighted

For the fiscal years ended March 31, 2023, 2022 and 2021, the estimated value, based on the closing price of our stock on the grant date, of time-based restricted stock awards granted to ZMC was $ 128.90 , $ 182.66 and $ 120.00 per share, respectively.

The following table summarizes the activity in non-vested restricted stock units to employees and ZMC under our stock-based compensation plans with time-based restricted stock awards presented at 100% of target number of shares that may potentially vest:

(in millions) Weighted

Non-vested restricted stock units at March 31, 2022 1.8 $ 155.36

Granted 2.1 119.17

Converted 4.0 116.12

Vested ( 2.2 ) 126.71

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Risk-free interest rate 2.6 - 2.8 %

0.1 % 0.2 % 0.2 % 0.2 %

Expected stock price volatility 35.9 - 37.6 %

34.2 - 37.6 %

37.3 % 36.3 % 40.7 % 40.8 %

Expected service period (years) 1.8 - 2.8

1.5 1.0 1.5 1.0

Dividends None None None None None None

The estimated value of market-based restricted stock awards granted to employees during the fiscal years ended March 31, 2023, 2022, and 2021 was $ 179.93 , $ 292.76 , and $ 279.09 per share, respectively.

For the fiscal years ended March 31, 2022, 2021, and 2020, the estimated value of the market-based restricted stock awards granted to ZelnickMedia was $ 293.32 , $ 200.34 , and $ 132.50 per share, respectively.

The following table summarizes the activity in non-vested restricted stock units to employees and ZelnickMedia under our stock-based compensation plans with market-based restricted stock awards presented at 100% of target number of shares that may potentially vest:

(in thousands) Weighted

For the fiscal years ended March 31, 2023, 2022, and 2021, the estimated value of the market-based restricted stock awards granted to ZMC was $ 175.12 , $ 293.32 , and $ 200.34 per share, respectively.

The following table summarizes the activity in non-vested restricted stock units to employees and ZMC under our stock-based compensation plans with market-based restricted stock awards presented at 100% of target number of shares that may potentially vest:

(in millions) Weighted

Non-vested restricted stock units at March 31, 2022 0.3 $ 242.90

Granted 0.5 177.51

Converted 0.1 116.12

Vested ( 0.2 ) 209.82

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The estimated value of performance-based restricted stock awards granted to employees during the fiscal year ended March 31, 2023, 2022, and 2021 was $ 125.03 , $ 176.05 , and $ 176.42 , respectively.

For the fiscal years ended March 31, 2022, 2021, and 2020, the estimated value of the performance-based restricted stock awards granted to ZelnickMedia was $ 182.66 , $ 120.00 , and $ 92.65 per share, respectively.

The following table summarizes the activity in non-vested restricted stock units to employees and ZelnickMedia under our stock-based compensation plans with performance restricted stock awards presented at 100% of target number of shares that may potentially vest:

(in thousands) Weighted

For the fiscal years ended March 31, 2023, 2022, and 2021, the estimated value of the performance-based restricted stock awards granted to ZMC was $ 125.90 , $ 182.66 , and $ 120.00 per share, respectively.

The following table summarizes the activity in non-vested restricted stock units to employees and ZMC under our stock-based compensation plans with performance restricted stock awards presented at 100% of target number of shares that may potentially vest:

(in millions) Weighted

Non-vested restricted stock units at March 31, 2022 3.6 $ 112.81

Granted 1.0 125.13

Converted 0.2 86.09

Vested ( 0.2 ) 117.36

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Non-vested restricted stock units at March 31, 2023 3.9 $ 113.28

Fair Value of Stock Options

All Converted Options generally vest over four to five years , with 25 % to 20 % vesting after one year and the remainder vesting monthly thereafter over 26 to 48 months, respectively.

The stock options have a contract term of 10 years and the related expense is determined using the Black-Scholes option pricing model on the date of grant.

The following table shows stock option activity for the fiscal year ended March 31, 2023:

(in millions) Weighted

Grant Date Aggregate Intrinsic Value of Stock Options Outstanding Weighted Average Contractual Term (In Years)

Balance as of March 31, 2022

Converted 1.6 71.66

Vested ( 0.9 ) 50.50

Forfeited — 70.41

Balance as of March 31, 2023

0.7 $ 49.54 $ 46.5 4.53

As of March 31, 2023

Exercisable options 0.7 $ 49.65 $ 45.5 4.47

Vested and expected to vest — $ 43.51 $ 1.0 7.42

The following table presents the weighted-average grant date fair value and related assumptions used to estimate the fair value of our stock options:

Fiscal Year Ended March 31,

Risk-free interest rate 0.6 - 2.8 %

Expected stock price volatility 36.0 - 46.5 %

Expected service period (years) 0.1 - 5.1

Dividends None

The aggregate intrinsic value of stock options exercised during the fiscal year ended March 31, 2023 was $ 66.3 .

For the fiscal year ended March 31, 2023, the amount of cash received from exercise of stock options was $ 43.5 .

The total fair value of options that vested during the fiscal year ended March 31, 2023 was $ 43.5 .

During the fiscal year ended March 31, 2023, total unrecognized stock-based compensation expense of $ 0.9 related to unvested stock options is expected to be recognized over a weighted-average recognition period of approximately 0.73 years.

Employee Stock Purchase Plans

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The ESPP is administered by the Compensation Committee of the Board of Directors and allows for eligible employees an option to purchase shares of our common stock, which the employee may or may not exercise during an offering period.

Eligible employees may authorize payroll deductions of between 1 % and 10 % of their compensation to purchase shares of common stock at 85% of the lower of the market price of our common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period.

Eligible employees may authorize payroll deductions of between 1 % and 15 % of their compensation to purchase shares of common stock at 85 % of the lower of the market price of

our common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period.

The fair value is determined using the Black-Scholes valuation model.

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For the fiscal year ended March 31, 2022, our employees purchased 0.1 shares for $ 19.7 with a weighted-average fair value of $ 137.84 .

SHARE REPURCHASE PROGRAM

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.

Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, our financial performance and other conditions.

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

During the fiscal years ended March 31, 2022, 2021, and 2020 we repurchased 1,260 , 0 , and 0 shares of our common stock in the open market, respectively, for $ 200,012 , $ 0 , and $ 0 , respectively, including commissions of $ 13 , $ 0 and $ 0 , respectively, as part of the program.

As of March 31, 2022, we had repurchased a total of 11,660 shares of our common stock under the program, and 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 Consolidated Balance Sheets.

INTEREST AND OTHER, NET

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Interest and other, net $ ( 141.9 ) $ ( 14.2 ) $ 8.8

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

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Other comprehensive (loss) income before reclassifications ( 43.6 ) — — ( 5.1 ) ( 48.7 )

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

Tax effect on cross-currency swap — — 845 — 845

Balance at March 31, 2022 $ ( 52.8 ) $ — $ — $ ( 4.5 ) $ ( 57.3 )

Other comprehensive income (loss) before reclassifications ( 43,589 ) — — ( 5,092 ) ( 48,681 )

Other comprehensive (loss) income before reclassifications ( 58.9 ) — — 2.9 ( 56.0 )

Balance at March 31, 2023 $ ( 111.7 ) $ — $ — $ ( 1.6 ) $ ( 113.3 )

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Allowance for doubtful accounts 0.4 — — — 0.4

Nordeus Acquisition

On June 1, 2021, we completed the acquisition of 94.5 % of Nordeus Limited ("Nordeus"), a privately-held Irish holding company of a Belgrade, Serbia based free-to-play mobile game developer, for initial consideration of $ 120,488 in cash, 515 shares of our common stock, and a contingent earn-out consideration arrangement that requires us to pay up to an aggregate

of $ 153,000 in cash if Nordeus achieves certain performance measures over the 12 - and 24 -month periods following the closing.

Zynga Acquisition

On May 23, 2022, we completed our acquisition of 100 % of the issued and outstanding shares of Zynga, a leading developer of mobile games (the "Zynga Acquisition").

Under the terms and conditions of the merger agreement, each Zynga stockholder received $ 3.50 in cash and 0.0406 shares of our common stock and cash in lieu of fractional shares for each share of Zynga common stock outstanding at closing.

Our consideration consisted of an aggregate of $ 3,992.4 in cash, 46.3 shares of our common stock, and $ 151.7 of replacement equity awards attributable to the pre-acquisition service period (see below).

In connection with the transaction, on April 14, 2022, we completed our offering and sale of $ 2,700.0 aggregate principal amount of our Senior Notes (refer to Note 11 - Debt ).

The cash portion of the merger consideration was funded from our cash on hand, including the proceeds from our senior notes offering.

Transaction costs of $ 139.5 , $ 14.2 , and $ 8.1 for the fiscal year ended March 31, 2023 have been recorded within General and administrative expense, Research and development, and Selling and marketing, respectively, in our Consolidated Statements of Operations.

We acquired Zynga as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property and to diversify and strengthen further our mobile offerings.

The acquisition-date fair value of the consideration totaled $ 9,521.8 , which consisted of the following:

Fair value of purchase consideration

Cash $ 3,992.4

Common stock ( 46.3 shares)

Replacement equity awards 151.7

Total $ 9,521.8

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

As we finalize our estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date).

The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Zynga:

Fair Value Weighted average useful life

Cash acquired $ 864.9 N/A

Accounts receivable 271.2 N/A

Prepaid expenses and other 194.4 N/A

Fixed assets 54.3 N/A

Right-of-use assets 92.7 N/A

Other tangible assets 67.1 N/A

Accounts payable ( 78.5 ) N/A

Accrued expenses and other current liabilities ( 352.8 ) N/A

Deferred revenue ( 333.1 ) N/A

Long-term debt ( 1,653.1 ) N/A

Deferred tax liabilities, net ( 922.9 ) N/A

Lease liabilities ( 15.7 ) N/A

Non-current lease liabilities ( 131.6 ) N/A

Other liabilities assumed ( 61.5 ) N/A

Intangible assets

Developed game technology 4,440.0 7

Branding and trade names 384.0 12

Game engine technology 261.0 4

User base 316.0 1

Developer relationships 57.0 4

Advertising technology 43.0 3

Customer relationships 31.0 5

Goodwill 5,994.4 N/A

Total $ 9,521.8

Convertible Notes and Related Capped Calls

Refer to Note 11 - Debt for a discussion of the Convertible Notes and related Capped Calls that were previously issued by Zynga.

Identifiable Intangible Assets Acquired and Goodwill

The preliminary fair value estimates of Developed game technology, certain Game engine technology, and Advertising technology were estimated using the multi-period excess earnings method.

The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the Developed game technology, Advertising technology, and Game engine technology intangible assets, respectively, net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets.

Key assumptions and estimates used in deriving the projected cash flows are forecasted revenue, EBITDA margin growth, long-term decay rate, and discount rate.

The amortization for these intangible assets has been recorded to Cost of revenue in our Consolidated Statements of Operations .

The preliminary fair value estimate of Branding and trade names was estimated using the relief-from-royalty method, which presumes the owner of the asset avoids hypothetical royalty payments that would need to be made for the use of the asset if the asset was not owned.

Key assumptions and estimates used are forecasted revenue, royalty rates, and discount rate.

The amortization for the Branding and trade names intangible asset has been recorded to Depreciation and amortization in our Consolidated Statements of Operations .

The preliminary fair value estimate of User base and certain Game engine technology was estimated using the replacement cost method.

The replacement cost methodology is a cost approach methodology based on replacement or

reproduction cost of the User Base as an indicator of fair value.

The key assumption and estimate used is the hypothetical replacement or reproduction cost.

The amortization for the User base intangible asset has been recorded to Selling and marketing in our Consolidated Statements of Operations .

The preliminary fair value estimate of Developer relationships and Customer relationships were estimated using the with and without method, which is a form of the income approach.

The with and without method considers the hypothetical impact to the projected cash flows of the business if the asset were not in place.

Key assumptions and estimates used are forecasted revenue and expenses as well as discount rate.

The amortization for the Developer relationships and Customer relationships intangible assets have been recorded to Research and development and Selling and marketing, respectively, in our Consolidated Statements of Operations .

The $ 5,994.4 of goodwill recognized, which is not deductible for U.S.

income tax purposes, is primarily attributable to the assembled workforce of the acquired business and expected synergies at the time of the acquisition.

Zynga Revenue and Earnings

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

Fiscal Year Ended March 31, 2023

Net revenue $ 2,159.2

Net loss 1,139.7

Pro-forma Financial Information

The following table summarizes the pro-forma consolidated results of operations (unaudited) for the fiscal year ended March 31, 2023 and 2022, as though the acquisition had occurred on April 1, 2021, the beginning of fiscal year 2022, and Zynga had been included in our consolidated results for the entire periods subsequent to that date.

Fiscal Year Ended March 31,

Pro-forma Net revenue $ 5,728.1 $ 6,313.1

Pro-forma Net loss 766.7 621.5

The unaudited pro-forma consolidated results above are based on the historical financial statements of Take-Two and Zynga and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of fiscal year 2022 and are not indicative of the future operating results of the combined company.

The unaudited pro-forma information for all periods presented includes the following adjustments, where applicable, for business combination accounting effects resulting from the acquisition:

(i) alignment of Zynga's accounting policy with Take-Two’s revenue accounting policy regarding the timing of recognition of consumable and durable virtual items, (ii) additional interest expense related to financing for the acquisition, (iii) additional incremental stock-based compensation expense for the replacement of Zynga’s outstanding equity awards with Take-Two replacement equity awards, (iv) alignment of Zynga's accounting policy with Take-Two’s policy to expense certain royalty prepayments until technological feasibility is established, (v) additional amortization expense related to finite-lived intangible assets acquired, and (vi) the related tax effects assuming that the business combination occurred on April 1, 2021.

The significant nonrecurring adjustments reflected in the unaudited pro-forma consolidated information above include the reclassification of the transaction costs and the related tax effects incurred after the acquisition to the earliest period presented.

Popcore Acquisition

On November 16, 2022, we completed the acquisition of 100 % of Popcore GmbH ("Popcore"), a privately-held Germany-based free-to-play mobile game developer, for initial consideration of $ 116.9 in cash, 0.6 shares of our common stock, and a contingent earn-out consideration arrangement that requires us to pay up to an aggregate of $ 105.0 in cash if Popcore achieves certain performance measures over each of the three calendar years following the closing.

The cash portion was funded from our cash on hand.

In addition, we exercised our option to purchase the remaining 5.5 % of the outstanding equity of Nordeus for cash consideration of $ 12,375 , in September 2021.

We acquired Nordeus as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property and to diversify and strengthen further our mobile offerings.

We acquired Popcore as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property and to diversify and strengthen further our mobile offerings.

The acquisition-date fair value of the consideration totaled $ 198.0 , which consisted of the following:

Fair value of purchase consideration

Cash, including call option exercise $ 132,863

Common stock ( 0.6 shares)

Contingent earn-out 23.3

Deferred payment $ 1,702

Total $ 198.0

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(Refer to Note 4 - Fair Value Measurements .)

During the fiscal year ended March 31, 2022, we recognized General and administrative expense of $ 48,000 , within our Consolidated Statements of Operations for the increase in fair value of the contingent earn-out consideration liability associated with the acquisition of Nordeus.

We reported $ 66,025 within Accrued expenses and $ 43,030 within Other long-term liabilities in our Consolidated Balance Sheet as of March 31, 2022.

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.

The preliminary fair values of net tangible and intangible assets are management’s estimates based on the information available at the acquisition date and may change over the measurement period, which will end no later than one year from the acquisition date, as additional information is received.

The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Nordeus:

The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Popcore:

Fair Value Weighted average useful life

Cash acquired $ 32.5 N/A

Other tangible net assets 18,174 N/A

Other tangible assets 23.6 N/A

Other liabilities assumed ( 74.3 ) N/A

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Developed game technology 113.0 5

User base 3,200 1

Branding and trade names 3,200 8

Game engine technology 27.7 4

Branding and trade names 3.4 7

Goodwill 72.1 N/A

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income tax purposes, is primarily attributable to the assembled workforce of the acquired business and expected synergies at the time of the acquisition.

The amounts of revenue and earnings of Nordeus included in our Consolidated Statement of Operations from the acquisition date to the fiscal year ending March 31, 2022 are as follows:

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

Fiscal Year Ended March 31, 2023

Net revenue $ 73.3

Net loss $ 26,759

The following table summarizes the pro-forma consolidated results of operations (unaudited) for the fiscal year ended March 31, 2022, as though the acquisition had occurred on April 1, 2020, the beginning of our fiscal year 2021 and Nordeus had been included in our consolidated results for the entire periods subsequent to that date.

Fiscal Year Ended March 31,

Pro forma Net revenue $ 3,514,644 $ 3,416,630

Pro forma Net income $ 425,401 $ 583,182

The unaudited pro-forma consolidated results above are based on the historical financial statements of the Company and Nordeus and not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of fiscal year 2021 and are not indicative of the future operating results of the combined company.

The financial information for Nordeus prior to the acquisition has been included in the pro-forma results of operations and includes certain adjustments to the historical consolidated financial statements of Nordeus to align with our accounting policies.

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 $ 5,100 for the fiscal year ended March 31, 2022, which have been recorded within General and administrative expense in our Consolidated Statements of Operations, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature.

Asset Acquisition

In June 2021, we acquired two office buildings in the United Kingdom to use for office space for total cash consideration of $ 72,908 .

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

Fair Value Weighted average useful life

Building $ 31,104 30

Land 38,243 N/A

Lease-in-place intangible asset 2,176 4

Total $ 71,523

Supplemental pro-forma financial information has not been provided as the historical results of Popcore were not material to us.

Transaction costs of $ 2.9 for the fiscal year ended March 31, 2023 have been recorded within General and administrative expense in our Consolidated Statements of Operations.

SUBSEQUENT EVENTS

Pending Acquisition

On January 9, 2022, we entered into a definitive merger agreement to acquire 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 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 the volume weighted average price ("VWAP") of Take-Two common stock on the Nasdaq Global Select Market for the

consecutive period beginning at 9:30 a.m.

New York time on the twenty-third trading day immediately preceding the closing date of the transaction and concluding at 4:00 p.m.

New York time on the third trading day preceding such closing date 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 of our common stock for the period noted in the prior sentence exceeds the higher end of that range the exchange ratio would be 0.0350 per share, and, if the VWAP is below the lower end of that range, the exchange ratio would be 0.0406 per share.

The transaction, which is currently anticipated to close during on Monday May 23, 2022, is subject to approval by Take-Two and Zynga stockholders and the satisfaction of the other customary closing conditions.

In connection with the transaction, on April 14, 2022, we completed our offering and sale of $ 2.7 billion aggregate principal amount of our senior notes, consisting of $ 1.0 billion principal amount of our 3.300 % Senior Notes due 2024 (the “2024 Notes”), $ 600 million principal amount of our 3.550 % Senior Notes due 2025 (the “2025 Notes”), $ 600 million principal amount of our 3.700 % Senior Notes due 2027 (the “2027 Notes”) and $ 500 million principal amount of our 4.000 % Senior Notes due 2032 (the “2032 Notes” and, together with the 2024 Notes, the 2025 Notes and the 2027 Notes, the “Notes”).The Notes were issued under an indenture between the Company and The Bank of New York Mellon, as trustee (the “Trustee”).

The Notes are the Company’s senior unsecured obligations and rank equally with all of our other existing and future unsubordinated obligations.

On April 14, 2023, we completed our offering and sale of $ 1,000.0 aggregate principal amount of our senior notes, consisting of $ 500.0 principal amount of 5.000 % Senior Notes due 2026 (the "2026 Notes") and $ 500.00 principal amount of 4.950 % Senior Notes due 2028 (the "2028 Notes").

The 2026 Notes mature on March 28, 2026 and bear interest at an annual rate of 5.000 %.

The 2025 Notes mature on April 14, 2025 and bear interest at an annual rate of 3.550 %.

The 2027 Notes mature on April 14, 2027 and bear interest at an annual rate of 3.700 %.

The 2032 Notes mature on April 14, 2032 and bear interest at an annual rate of 4.000 %.

We will pay interest on the 2024 Notes semiannually on March 28 and September 28 of each year, commencing September 28, 2022.

We will pay interest on each of the 2025 Notes, 2027 Notes and 2032 Notes semi-annually on April 14 and October 14 of each year, commencing October 14, 2022.

ZelnickMedia Management Agreement

See Note 3 - Management Agreement for information relating to the 2022 Management Agreement entered into with ZelnickMedia.

The 2028 Notes mature on March 28, 2028 and bear interest at an annual rate of 4.950 %.

We will pay interest on the 2026 Notes and 2028 Notes semi-annually on March 28 and September 28 of each year, commencing September 28, 2023.

The 2026 Notes and 2028 Notes were issued under an indenture between the Company and The Bank of New York Mellon, as trustee.

The proceeds were used to fully repay the $ 350.0 Term Loan on April 27, 2023.

The remaining proceeds will be used to partially pay down other outstanding debt.

On May 18, 2023, we announced that we have commenced a tender offer to purchase for cash up to $ 500.0 aggregate principal amount of our 2024 Notes.

The tender offer is being conducted on the terms and conditions set forth in the offer to purchase dated May 18, 2023.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

13 unchanged sentences

Michael Dornemann Lead Independent Director May 25, 2023

/s/ WILLIAM "BING" GORDON

William "Bing" Gordon Director May 25, 2023

/s/ ROLAND HERNANDEZ

3 unchanged sentences

Michael Sheresky Director May 25, 2023

/s/ ELLEN SIMINOFF

Ellen Siminoff Director May 25, 2023

/s/ LAVERNE SRINIVASAN

5 unchanged sentences

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-K

Item 9A. Controls and Procedures