Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2019 | Jul. 24, 2019 | |
Cover page. | ||
Entity Registrant Name | TAKE-TWO INTERACTIVE SOFTWARE, INC. | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity File Number | 001-34003 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0350842 | |
Entity Address, Address Line One | 110 West 44th Street | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10036 | |
City Area Code | 646 | |
Local Phone Number | 536-2842 | |
Title of 12(b) Security | Common Stock, $.01 par value | |
Trading Symbol | TTWO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 113,178,103 | |
Entity Central Index Key | 0000946581 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --03-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 984,625 | $ 826,525 |
Short-term investments | 557,653 | 744,485 |
Restricted cash | 627,370 | 565,461 |
Accounts receivable, net of allowances of $445 and $995 at June 30, 2019 and March 31, 2019, respectively | 352,625 | 395,729 |
Inventory | 23,847 | 28,200 |
Software development costs and licenses | 18,070 | 28,880 |
Deferred cost of goods sold | 36,565 | 51,867 |
Prepaid expenses and other | 220,324 | 186,688 |
Total current assets | 2,821,079 | 2,827,835 |
Fixed assets, net | 126,393 | 127,882 |
Right-of-use assets | 124,859 | 0 |
Software development costs and licenses, net of current portion | 633,597 | 603,436 |
Deferred cost of goods sold, net of current portion | 525 | 1,028 |
Goodwill | 391,404 | 381,717 |
Other intangibles, net | 68,008 | 73,115 |
Deferred tax assets | 108,979 | 134,732 |
Other assets | 91,378 | 93,320 |
Total assets | 4,366,222 | 4,243,065 |
Current liabilities: | ||
Accounts payable | 55,379 | 72,797 |
Accrued expenses and other current liabilities | 1,038,748 | 1,035,695 |
Deferred revenue | 826,085 | 843,302 |
Lease liabilities | 21,794 | 0 |
Total current liabilities | 1,942,006 | 1,951,794 |
Non-current deferred revenue | 22,097 | 21,058 |
Non-current lease liabilities | 125,128 | 0 |
Other long-term liabilities | 190,664 | 229,633 |
Total liabilities | 2,279,895 | 2,202,485 |
Commitments and contingencies (See Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, 5,000 shares authorized; no shares issued and outstanding at June 30, 2019 and March 31, 2019 | 0 | 0 |
Common stock, $.01 par value, 200,000 shares authorized; 135,527 and 134,602 shares issued and 113,106 and 112,181 outstanding at June 30, 2019 and March 31, 2019, respectively | 1,355 | 1,346 |
Additional paid-in capital | 2,025,626 | 2,019,369 |
Treasury stock, at cost; 22,421 common shares at June 30, 2019 and March 31, 2019 | (820,572) | (820,572) |
Retained earnings | 923,906 | 877,626 |
Accumulated other comprehensive loss | (43,988) | (37,189) |
Total stockholders' equity | 2,086,327 | 2,040,580 |
Total stockholders' equity | $ 4,366,222 | $ 4,243,065 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances (in dollars) | $ 445 | $ 995 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 135,527,000 | 134,602,000 |
Common stock, shares outstanding | 113,106,000 | 112,181,000 |
Treasury stock, shares | 22,421,000 | 22,421,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||
Net revenue | $ 540,459 | $ 387,982 |
Cost of goods sold | 241,469 | 131,365 |
Gross profit | 298,990 | 256,617 |
Selling and marketing | 91,821 | 58,306 |
General and administrative | 74,833 | 67,735 |
Research and development | 68,963 | 50,712 |
Depreciation and amortization | 11,257 | 9,260 |
Business reorganization | 386 | (242) |
Total operating expenses | 247,260 | 185,771 |
Income from operations | 51,730 | 70,846 |
Interest and other, net | 10,425 | 6,601 |
Income before income taxes | 62,155 | 77,447 |
Provision for income taxes | 15,875 | 5,754 |
Net income | $ 46,280 | $ 71,693 |
Earnings per share: | ||
Basic earnings per share (in dollars per share) | $ 0.41 | $ 0.63 |
Diluted earnings per share (in dollars per share) | $ 0.41 | $ 0.62 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 46,280 | $ 71,693 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | (8,797) | (26,817) |
Cash flow hedges: | ||
Change in unrealized gains (losses) | 202 | 991 |
Reclassification to earnings | 1,083 | 0 |
Tax effect on effective cash flow hedges | (9) | 133 |
Change in fair value of effective cash flow hedge | 1,276 | 1,124 |
Available-for-sale securities: | ||
Unrealized loss, net on available-for-sale securities, net of taxes | 722 | 409 |
Change in fair value of available for sale securities | 722 | 409 |
Other comprehensive loss | (6,799) | (25,284) |
Comprehensive income | $ 39,481 | $ 46,409 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income | $ 46,280 | $ 71,693 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Amortization and impairment of software development costs and licenses | 30,498 | 6,858 |
Depreciation | 11,134 | 9,130 |
Amortization and impairment of intellectual property | 5,560 | 6,861 |
Stock-based compensation | 57,432 | 24,598 |
Other, net | 1,321 | (2,980) |
Changes in assets and liabilities: | ||
Accounts receivable | 44,041 | 61,355 |
Inventory | 4,029 | 3,692 |
Software development costs and licenses | (56,968) | (54,663) |
Prepaid expenses and other assets | (131,121) | (21,464) |
Deferred revenue | (15,871) | (95,075) |
Deferred cost of goods sold | 15,619 | 8,409 |
Accounts payable, accrued expenses and other liabilities | 96,581 | (29,597) |
Net cash provided by (used in) operating activities | 108,535 | (11,183) |
Investing activities: | ||
Change in bank time deposits | 133,303 | (29,840) |
Proceeds from available-for-sale securities | 82,424 | 51,388 |
Purchases of available-for-sale securities | (28,248) | (44,108) |
Purchases of fixed assets | (9,971) | (14,289) |
Purchase of long-term investment | (2,000) | 0 |
Business acquisitions | (8,715) | (3,149) |
Net cash provided by (used in) investing activities | 166,793 | (39,998) |
Financing activities: | ||
Tax payment related to net share settlements on restricted stock awards | (52,118) | (58,403) |
Repurchase of common stock | 0 | (153,500) |
Net cash used in financing activities | (52,118) | (211,903) |
Effects of foreign currency exchange rates on cash and cash equivalents | (3,201) | (9,103) |
Net change in cash, cash equivalents, and restricted cash | 220,009 | (272,187) |
Cash, cash equivalents, and restricted cash, beginning of year | 1,391,986 | 1,246,371 |
Cash, cash equivalents, and restricted cash, end of period | $ 1,611,995 | $ 974,184 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings/(Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) |
Balance (in shares) at Mar. 31, 2018 | 132,743 | |||||
Balance, Treasury stock (in shares) at Mar. 31, 2018 | (18,705) | |||||
Balance at Mar. 31, 2018 | $ 1,488,970 | $ 1,327 | $ 1,888,039 | $ (458,180) | $ 73,516 | $ (15,732) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 71,693 | 71,693 | ||||
Change in cumulative foreign currency translation adjustment | (26,817) | |||||
Change in cumulative foreign currency translation adjustment | (31,470) | (31,470) | ||||
Change in unrealized gains on cash flow hedge, net | 1,125 | 1,125 | ||||
Net unrealized gain on available-for-sale securities, net of taxes | 409 | 409 | ||||
Stock-based compensation | 55,523 | 55,523 | ||||
Repurchased common stock (in shares) | (1,597) | |||||
Repurchased common stock | (153,500) | $ (153,500) | ||||
Issuance of restricted stock, net of forfeitures and cancellations (in shares) | 1,438 | |||||
Issuance of restricted stock, net of forfeitures and cancellations | 0 | $ 14 | (14) | |||
Conversion of 1.00% Convertible Notes Due 2018 (in shares) | 137 | |||||
Conversion of 1.00% Convertible Notes Due 2018 | 2,931 | $ 2 | 2,929 | |||
Net share settlement of restricted stock awards (in shares) | (507) | |||||
Net share settlement of restricted stock awards | (58,402) | $ (5) | (58,397) | |||
Balance (in shares) at Jun. 30, 2018 | 133,811 | |||||
Balance, Treasury stock (in shares) at Jun. 30, 2018 | (20,302) | |||||
Balance at Jun. 30, 2018 | $ 1,852,205 | $ 1,338 | 1,888,080 | $ (611,680) | 615,482 | (41,015) |
Balance (in shares) at Mar. 31, 2019 | 134,602 | |||||
Balance, Treasury stock (in shares) at Mar. 31, 2019 | (22,421) | (22,421) | ||||
Balance at Mar. 31, 2019 | $ 2,040,580 | $ 1,346 | 2,019,369 | $ (820,572) | 877,626 | (37,189) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 46,280 | 46,280 | ||||
Change in cumulative foreign currency translation adjustment | (8,797) | (8,797) | ||||
Change in unrealized gains on cash flow hedge, net | 1,276 | 1,276 | ||||
Net unrealized gain on available-for-sale securities, net of taxes | 722 | 722 | ||||
Stock-based compensation | 53,251 | 53,251 | ||||
Issuance of restricted stock, net of forfeitures and cancellations (in shares) | 1,339 | |||||
Issuance of restricted stock, net of forfeitures and cancellations | 0 | $ 13 | (13) | |||
Net share settlement of restricted stock awards (in shares) | (476) | |||||
Net share settlement of restricted stock awards | (52,118) | $ (5) | (52,113) | |||
Employee share purchase plan settlement (in shares) | 62 | |||||
Employee share purchase plan settlement | $ 5,133 | $ 1 | 5,132 | |||
Balance (in shares) at Jun. 30, 2019 | 135,527 | |||||
Balance, Treasury stock (in shares) at Jun. 30, 2019 | (22,421) | (22,421) | ||||
Balance at Jun. 30, 2019 | $ 2,086,327 | $ 1,355 | $ 2,025,626 | $ (820,572) | $ 923,906 | $ (43,988) |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Take-Two Interactive Software, Inc. (the "Company," "we," "us," or similar pronouns) was incorporated in the state of Delaware in 1993. We are a leading developer, publisher and marketer of interactive entertainment for consumers around the globe. We develop and publish products through our labels Rockstar Games, 2K, and Private Division, as well as Social Point, a leading developer of mobile games. Our products are designed for console systems and personal computers, including smart phones and tablets, and are delivered through physical retail, digital download, online platforms, and cloud streaming services. Basis of Presentation The accompanying Condensed Consolidated Financial Statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries and, in our opinion, reflect all normal and recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows. Interim results may not be indicative of the results that may be expected for the full fiscal year. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of these Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions when appropriate. Actual results could differ materially from those estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), although we believe that the disclosures are adequate to make the information presented not misleading. These Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with our annual Consolidated Financial Statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 . Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation. Recently Adopted Accounting Pronouncements Accounting for Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the accounting for leases codified under Topic 842, Leases . The new lease accounting standard replaces all current U.S. GAAP guidance on this topic. The new standard, among other things, requires a lessee to classify a lease as either an operating or financing lease and to recognize a lease liability and a right-of-use (“ROU”) asset for its leases. On April 1, 2019, we adopted the new lease accounting standard using the alternative transition approach provided in ASU 2018-11, “Leases (Topic 842) - Targeted Improvements,” which allows initial application of the new standard using the modified retrospective method. As part of the adoption, the new lease accounting standard allows a number of practical expedients and exemptions. At transition, we elected the following: • The package of practical expedients, which allows us to carryforward our historical lease classification, assessment of whether a contract is or contains a lease and initial direct costs for any leases that exist prior to adoption of the new standard; • The practical expedient to not separate non-lease components from the related lease components; and • The exemption to not apply the balance sheet recognition requirements for leases with a lease term of 12 months or less and instead expense those costs on a straight-line basis over the lease term or in the period in which the obligation is incurred, if such costs are variable. As a result of the adoption, we have updated our significant accounting policy disclosure as set forth below to include our accounting policy under Topic 842 for transactions from April 1, 2019 and thereafter: Leases We determine if an arrangement is a lease at contract inception. 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. 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. Lease assets and liabilities are recognized based on the present value of future lease payments over the lease term at the commencement date. Included in the lease liability are future lease payments that are fixed, in-substance fixed, or payments based on an index or rate known at the commencement date of the lease. Variable lease payments are recognized as lease expenses as incurred. The operating lease ROU asset also includes any lease payments made prior to commencement, initial direct costs incurred, and lease incentives received. All ROU assets are reviewed for impairment. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate in determining the present value of future lease payments. The incremental borrowing rate represents the rate required to borrow funds over a similar term to purchase the leased asset and is based on an unsecured borrowing rate and risk-adjusted to approximate a collateralized rate at the commencement date of the lease. In determining our lease liability, the lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise such option. For operating leases, the lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Lease modifications result in remeasurement of the lease liability. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term. Impact of adoption As a result of adopting Topic 842, the following adjustments, including reclassifying prepaid and deferred rent to ROU, were made to our Condensed Consolidated Balance Sheet at April 1, 2019: March 31, 2019 Adjustments April 1, 2019 ASSETS Prepaid expenses and other $ 186,688 $ (792 ) $ 185,896 Right-of-use assets $ — $ 118,799 $ 118,799 LIABILITIES AND STOCKHOLDERS' EQUITY Accrued expenses and other current liabilities $ 1,035,695 $ (2,976 ) $ 1,032,719 Lease liabilities $ — $ 18,937 $ 18,937 Non-current lease liabilities $ — $ 122,041 $ 122,041 Other long-term liabilities $ 229,633 $ (19,995 ) $ 209,638 The adoption of Topic 842 did not have an impact on our Condensed Consolidated Statements of Operation or Condensed Consolidated Statements of Cash Flows. Recently Issued Accounting Pronouncements Accounting for Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2019 (April 1, 2020 for the Company), with early adoption permitted. Certain disclosures in ASU 2018-13 are required to be applied on a retrospective basis and others on a prospective basis. We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of revenue Product revenue 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. upon delivery of the software product). Service and other revenue Service and other revenue is primarily comprised of revenue from game related services, virtual currency transactions, and in-game purchases which are recognized over an estimated service period. Net revenue by product revenue and service and other was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Service and other 424,385 309,187 Product 116,074 78,795 Total net revenue $ 540,459 $ 387,982 Full game and other revenue 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. Recurrent consumer spending revenue Recurrent consumer spending revenue is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases. Net revenue by full game and other revenue and recurrent consumer spending was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Recurrent consumer spending 314,858 241,030 Full game and other 225,601 146,952 Total net revenue $ 540,459 $ 387,982 Geography We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: United States $ 330,479 $ 221,411 International 209,980 166,571 Total net revenue $ 540,459 $ 387,982 Platform Net revenue by platform was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Console $ 434,814 $ 294,730 PC and other 105,645 93,252 Total net revenue $ 540,459 $ 387,982 Distribution channel Our products are delivered through digital online services (digital download, online platforms, and cloud streaming) and physical retail and other. Net revenue by distribution channel was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Digital online $ 427,781 $ 315,047 Physical retail and other 112,678 72,935 Total net revenue $ 540,459 $ 387,982 Deferred Revenue We record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations. Deferred revenue, including current and non-current balances as of June 30, 2019 and March 31, 2019 were $848,182 and $864,360 , respectively. For the three months ended June 30, 2019 , the additions to our deferred revenue balance were due primarily to cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were due primarily to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business. During the three months ended June 30, 2019 , $330,421 of revenue was recognized that was included in the deferred revenue balance at the beginning of the period. As of June 30, 2019 , the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $1,042,083 , which includes our deferred revenue balances and amounts to be invoiced and recognized in future periods. We expect to recognize approximately $958,985 of this balance as revenue over the next 12 months, and the remainder thereafter. This balance does not include an estimate for variable consideration arising from sales-based royalty license revenue in excess of the contractual minimum guarantee. As of June 30, 2019 and March 31, 2019 , our contract asset balances were $62,145 and $57,643 , respectively, which are recorded within Prepaid expenses and other in our Condensed Consolidated Balance Sheets. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, 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. This hierarchy requires entities to maximize the use of "observable inputs" and minimize the use of "unobservable inputs." The three levels of inputs used to measure fair value are as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which is measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. June 30, 2019 Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Balance Sheet Classification Money market funds $ 284,236 $ 284,236 $ — $ — Cash and cash equivalents Bank-time deposits 150,000 150,000 — — Cash and cash equivalents Commercial paper 180,196 — 180,196 — Cash and cash equivalents US Treasuries 24,987 24,987 — — Cash and cash equivalents Corporate bonds 18,598 — 18,598 — Cash and cash equivalents Corporate bonds 260,752 — 260,752 — Short-term investments Bank-time deposits 254,417 254,417 — — Short-term investments US Treasuries 35,448 35,448 — — Short-term investments Commercial paper 7,036 — 7,036 — Short-term investments Money market funds 620,397 620,397 — — Restricted cash Cross-currency swap 950 — 950 — Prepaid expenses and other Private equity 1,823 — — 1,823 Other assets Foreign currency forward contracts (112 ) — (112 ) — Accrued expenses and other current liabilities Total recurring fair value measurements, net $ 1,838,728 $ 1,369,485 $ 467,420 $ 1,823 March 31, 2019 Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Balance Sheet Classification Money market funds $ 389,936 $ 389,936 $ — $ — Cash and cash equivalents Commercial paper 39,246 — 39,246 — Cash and cash equivalents US Treasuries 25,449 25,449 — — Cash and cash equivalents Money market funds 565,461 565,461 — — Restricted cash Bank-time deposits 387,720 387,720 — — Short-term investments Corporate bonds 296,141 — 296,141 — Short-term investments US Treasuries 55,634 55,634 — — Short-term investments Commercial paper 4,990 — 4,990 — Short-term investments Cross-currency swap 791 — 791 — Prepaid expenses and other Private equity 1,823 — — 1,823 Other assets Foreign currency forward contracts (423 ) — (423 ) — Accrued and other current liabilities Total recurring fair value measurements, net $ 1,766,768 $ 1,424,200 $ 340,745 $ 1,823 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 three months ended June 30, 2019 . |
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT | 3 Months Ended |
Jun. 30, 2019 | |
MANAGEMENT AGREEMENT | |
MANAGEMENT AGREEMENT | MANAGEMENT AGREEMENT In November 2017, we entered into a new management agreement, (the "2017 Management Agreement"), with ZelnickMedia Corporation ("ZelnickMedia") that replaces our previous agreement with ZelnickMedia and pursuant to which ZelnickMedia provides financial and management consulting services through March 31, 2024. The 2017 Management Agreement became effective January 1, 2018. As part of the 2017 Management Agreement, Strauss Zelnick, the President of ZelnickMedia, continues to serve as Executive Chairman and Chief Executive Officer of the Company, and Karl Slatoff, a partner of ZelnickMedia, continues to serve as President of the Company. The 2017 Management Agreement provides for an annual management fee of $3,100 over the term of the agreement and a maximum annual bonus opportunity of $7,440 over the term of the agreement, based on the Company achieving certain performance thresholds. In consideration for ZelnickMedia's services, we recorded consulting expense (a component of General and administrative expenses) of $1,670 and $1,705 during the three months ended June 30, 2019 and 2018 , respectively. We recorded stock-based compensation expense for restricted stock units granted to ZelnickMedia, which is included in General and administrative expenses of $5,545 and $4,517 during the three months ended June 30, 2019 and 2018 , respectively. In connection with the 2017 Management Agreement, we have granted restricted stock units as follows: Three Months Ended June 30, 2019 2018 Time-based 92 86 Market-based(1) 168 158 Performance-based(1) IP 28 27 Recurrent Consumer Spending ("RCS") 28 26 Total—Performance-based 56 53 Total Restricted Stock Units 316 297 _______________________________________________________________________________ (1) Represents the maximum number of shares eligible to vest. Time-based restricted stock units granted in fiscal 2020 will vest on April 13, 2021 , and those granted in fiscal 2019 will vest on April 13, 2020 , in each case provided that the 2017 Management Agreement has not been terminated prior to such vesting date. Market-based restricted stock units granted in fiscal 2020 are eligible to vest on April 13, 2021 , and those granted in fiscal 2019 are eligible to vest on April 13, 2020 , in each case provided that the 2017 Management Agreement has not been terminated prior to such vesting date. 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 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 the 75th percentile. Performance-based restricted stock units granted in fiscal 2020 are eligible to vest on April 13, 2021 , and those granted in fiscal 2019 are eligible to vest on April 13, 2020 , in each case provided that the 2017 Management Agreement has not been terminated prior to such vesting date. The performance-based restricted stock units, of which 50% are tied to "IP" and 50% to "RCS" (as defined in the relevant grant agreement), are eligible to vest based on the Company's achievement of certain performance metrics (as defined in the relevant grant agreement) of either individual product releases of "IP" or "RCS" measured over a two -year period. The target number of performance-based restricted stock units that may be earned pursuant to these grants is equal to 50% of the grant amounts set forth in the above table (the numbers in the table represent the maximum number of performance-based restricted stock units that may be earned). At the end of each reporting period, we assess the probability of each performance metric and upon determination that certain thresholds are probable, we record expense for the unvested portion of the shares of performance-based restricted stock units. The unvested portion of time-based, market-based and performance-based restricted stock units held by ZelnickMedia were 613 and 526 as of June 30, 2019 and March 31, 2019 , respectively. 209 restricted stock units previously granted to ZelnickMedia vested and 20 restricted stock units were forfeited by ZelnickMedia during the three months ended June 30, 2019 . |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 3 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
SHORT-TERM INVESTMENTS | SHORT-TERM INVESTMENTS Our Short-term investments consisted of the following: June 30, 2019 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 254,417 $ — $ — $ 254,417 Available-for-sale securities: Corporate bonds 259,496 1,280 (25 ) 260,751 US Treasuries 35,388 64 (3 ) 35,449 Commercial paper 7,036 — — 7,036 Total Short-term investments $ 556,337 $ 1,344 $ (28 ) $ 557,653 March 31, 2019 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 387,720 $ — $ — $ 387,720 Available-for-sale securities: Corporate bonds 295,526 742 (127 ) 296,141 US Treasuries 55,656 27 (49 ) 55,634 Commercial paper 4,990 4,990 Total short-term investments $ 743,892 $ 769 $ (176 ) $ 744,485 Based on our review of investments with unrealized losses, we did not consider these investments to be other-than-temporarily impaired as of June 30, 2019 or March 31, 2019 . We do not intend to sell any of our investments with unrealized losses, nor is it more likely than not that we will be required to sell those investments. The following table summarizes the contracted maturities of our short-term investments at June 30, 2019 : June 30, 2019 Amortized Fair Short-term investments Due in 1 year or less $ 468,915 $ 469,523 Due in 1 - 2 years 87,422 88,130 Total short-term investments $ 556,337 $ 557,653 |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 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. 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. Foreign currency forward contracts The following table shows the gross notional amounts of foreign currency forward contracts: June 30, 2019 March 31, 2019 Forward contracts to sell foreign currencies $ 72,538 $ 116,590 Forward contracts to purchase foreign currencies 42,544 87,793 For the three months ended June 30, 2019 and 2018 , we recorded a loss of $3,298 and a gain of $2,404 , respectively, related to foreign currency forward contracts in Interest and other, net in our Condensed Consolidated Statements of Operations. Our foreign currency exchange forward contracts are not designated as hedging instruments under hedge accounting and are used to reduce the impact of foreign currency on certain balance sheet exposures and certain revenue and expense. 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 We entered into a cross-currency swap agreement in August 2017 related to an intercompany loan that has been designated and accounted for as a cash flow hedge of foreign currency exchange risk. The intercompany loan is related to the acquisition of Social Point. As of June 30, 2019 , the notional amount of the cross-currency swap is $115,641 . This cross-currency swap mitigates the exposure to fluctuations in the U.S. dollar-euro exchange rate related to the intercompany loan. The critical terms of the cross- currency swap agreement correspond to the intercompany loan and both mature at the same time in 2027; as such, there was no ineffectiveness during the period. Changes in the fair value of this cross-currency swap are recorded in Accumulated other comprehensive income (loss) and offset the change in value of interest and principal payment as a result of changes in foreign exchange rates. Resulting gains or losses from the cross-currency swap are reclassified from Accumulated other comprehensive income (loss) to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loan. We recognize the difference between the U.S. dollar interest payments received from the swap counterparty and the U.S. dollar equivalent of the euro interest payments made to the swap counterparty in Interest and other, net on our Consolidated Statement of Operations. There are no credit-risk related contingent features associated with these swaps. |
INVENTORY
INVENTORY | 3 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory balances by category were as follows: June 30, 2019 March 31, 2019 Finished products $ 21,267 $ 24,847 Parts and supplies 2,580 3,353 Inventory $ 23,847 $ 28,200 Estimated product returns included in inventory at June 30, 2019 and March 31, 2019 were $439 and $491 , respectively. |
SOFTWARE DEVELOPMENT COSTS AND
SOFTWARE DEVELOPMENT COSTS AND LICENSES | 3 Months Ended |
Jun. 30, 2019 | |
SOFTWARE DEVELOPMENT COSTS AND LICENSES | |
SOFTWARE DEVELOPMENT COSTS AND LICENSES | SOFTWARE DEVELOPMENT COSTS AND LICENSES Details of our capitalized software development costs and licenses were as follows: June 30, 2019 March 31, 2019 Current Non-current Current Non-current Software development costs, internally developed $ 6,543 $ 453,874 $ 14,809 $ 434,712 Software development costs, externally developed 3,574 175,537 3,655 168,381 Licenses 7,953 4,186 10,416 343 Software development costs and licenses $ 18,070 $ 633,597 $ 28,880 $ 603,436 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Jun. 30, 2019 | |
Liabilities, Current [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: June 30, 2019 March 31, 2019 Software development royalties $ 760,928 $ 713,201 Compensation and benefits 65,324 73,695 Refund liability 53,724 65,853 Licenses 47,679 56,221 Marketing and promotions 31,235 42,390 Other 79,858 84,335 Accrued expenses and other current liabilities $ 1,038,748 $ 1,035,695 |
DEBT
DEBT | 3 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Credit Agreement On February 8, 2019 , we entered into an unsecured Credit Agreement (the “Credit Agreement”). The Credit Agreement runs through February 8, 2024 . The Credit Agreement provides for an unsecured five -year revolving credit facility with commitments of $200,000 , including sublimits for (i) the issuance of letters of credit in an aggregate face amount of up to $25,000 and (ii) borrowings and letters of credit denominated in Pounds Sterling, Euros and Canadian Dollars in an aggregate principal amount of up to $25,000 . In addition, the Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional $250,000 in term loans or revolving credit facilities. Loans under the New Credit Agreement will bear interest at a rate of (a) 0.250% to 0.750% above a certain base rate ( 5.50% at June 30, 2019 ) or (b) 1.125% to 1.750% above LIBOR (approximately 2.40% at June 30, 2019 ), which rates are determined by reference to our consolidated total net leverage ratio. We had no outstanding borrowings at June 30, 2019 . Information related to availability on our Credit Agreement was as follows: June 30, 2019 March 31, 2019 Available borrowings $ 198,336 $ 198,336 Outstanding letters of credit 1,664 1,664 We recorded interest expense and fees related to the Credit Agreement of $82 for the three months ended June 30, 2019 and $110 for the three months ended June 30, 2018 under a prior credit arrangement, which was terminated on the same day that we entered into the Credit Agreement. 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). |
EARNINGS PER SHARE ("EPS")
EARNINGS PER SHARE ("EPS") | 3 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE (EPS) | EARNINGS PER SHARE ("EPS") The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended June 30, 2019 2018 Computation of Basic earnings per share: Net income $ 46,280 $ 71,693 Weighted average shares outstanding—basic 112,621 112,941 Basic earnings per share $ 0.41 $ 0.63 Computation of Diluted earnings per share: Net income $ 46,280 $ 71,693 Add: interest expense, net of tax, on Convertible Notes — 95 Net income for diluted earnings per share calculation $ 46,280 $ 71,788 Weighted average shares outstanding—basic 112,621 112,941 Add: dilutive effect of common stock equivalents 1,107 3,044 Weighted average common shares outstanding—diluted 113,728 115,985 Diluted earnings per share $ 0.41 $ 0.62 Certain of our unvested stock-based awards (including restricted stock units and restricted stock awards) are considered participating securities since these securities have non-forfeitable rights to dividends or dividend equivalents during the contractual period of the award and thus requires the two-class method of computing EPS. As of June 30, 2019 , we have no material participating securities outstanding. During the three months ended June 30, 2019 , 1,338 restricted stock awards vested, we granted 700 unvested restricted stock awards, and 41 unvested restricted stock awards were forfeited. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 3 Months Ended |
Jun. 30, 2019 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The following table provides the components of accumulated other comprehensive loss: Three Months Ended June 30, 2019 Foreign Unrealized Unrealized Unrealized Total Balance at March 31, 2019 $ (33,090 ) $ 600 $ (5,285 ) $ 586 $ (37,189 ) Other comprehensive income (loss) before reclassifications (8,797 ) 193 722 (7,882 ) Amounts reclassified from accumulated other comprehensive loss 1,083 1,083 Balance at June 30, 2019 $ (41,887 ) $ 600 $ (4,009 ) $ 1,308 $ (43,988 ) Three Months Ended June 30, 2018 Foreign Unrealized Unrealized Unrealized Total Balance at March 31, 2018 $ (4,287 ) $ 600 $ (10,191 ) $ (1,854 ) $ (15,732 ) Other comprehensive income (loss) before reclassifications (26,817 ) — 9,585 409 (16,823 ) Amounts reclassified from accumulated other comprehensive loss — — (8,460 ) — (8,460 ) Balance at June 30, 2018 $ (31,104 ) $ 600 $ (9,066 ) $ (1,445 ) $ (41,015 ) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We have entered into various agreements in the ordinary course of business that require substantial cash commitments over the next several years. Other than agreements entered into in the ordinary course of business and in addition to the agreements requiring known cash commitments as reported in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 , we did not have any significant changes to our commitments since March 31, 2019 . Legal and Other Proceedings We are, or may become, subject to demands and claims (including intellectual property claims) and are involved in routine litigation in the ordinary course of business which we do not believe to be material to our business or financial condition or results of operations. We have appropriately accrued amounts related to certain of these claims and legal and other proceedings. 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. |
BUSINESS REORGANIZATION
BUSINESS REORGANIZATION | 3 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
BUSINESS REORGANIZATION | BUSINESS REORGANIZATION In the first quarter of fiscal 2018, we announced and initiated actions to implement a strategic reorganization at one of our labels (the "2018 Plan"). In connection with this initiative, we recorded business reorganization expense of $386 during the three months ended June 30, 2019 due to updating estimates for employee separation costs and did not make any payments related to these reorganization activities. As of June 30, 2019 , $3,698 remained accrued for in Accrued expenses and other current liabilities and $2,961 in Other non-current liabilities. Although we may record additional expense or benefit in future periods to true-up estimates, we do not expect to incur additional reorganization costs in connection with the 2018 Plan. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The provision for income taxes for the three months ended June 30, 2019 is based on our projected annual effective tax rate for fiscal year 2020 , adjusted for specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $15,875 for the three months ended June 30, 2019 as compared to $5,754 for the prior year period. When compared to the statutory rate of 21% , the effective tax rate of 25.5% for the three months ended June 30, 2019 was primarily due to a tax expense of $ 19,826 from the reversal of net deferred tax benefits relating to the Altera case discussed below, partially offset by a tax benefit of $ 11,601 from changes in unrecognized tax benefits due to audit settlements. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner, which concluded that related parties in an intercompany cost-sharing arrangement are not required to share costs related to stock-based compensation. In February 2016, the U.S. Internal Revenue Service appealed the decision to the U.S Court of Appeals for the Ninth Circuit. On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S. Tax Court. As a result of this decision, we are no longer reflecting a net tax benefit within our financial statements related to the removal of stock-based compensation from our intercompany cost-sharing arrangement. During the three months ended June 30, 2019 , we removed the deferred tax asset and a deferred tax liability associated with this matter from its financial statements, resulting in a cumulative net discrete income tax expense of $ 19,826 . On July 22, 2019, the taxpayer requested a rehearing before the full Ninth Circuit and may subsequently appeal from the Ninth Circuit to the Supreme Court. As a result, the final outcome of the case is uncertain. We will continue to monitor ongoing developments of this matter and potential impacts to our financial statements. In addition, on June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, which overturned previous case law that precluded states from requiring retailers to collect and remit sales and use tax collection on sales made to in-state customers unless the retailer had physical presence in the state. Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint. We are regularly examined by domestic and foreign taxing authorities. Examinations may result in tax assessments in excess of amounts claimed and the payment of additional taxes. We believe our tax positions comply with applicable tax law, and that we have adequately provided for reasonably foreseeable tax assessments. It is possible that settlement of audits or the expiration of the statute of limitations may have an impact on our effective tax rate in future periods. |
LEASES
LEASES | 3 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES 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 fourteen 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. The exercise of lease renewal options is generally at our sole discretion. Additionally, the majority of our leases are classified as operating leases. Information related to our operating leases are as follows: Three Months Ended Lease costs Operating lease costs 7,008 Short term lease costs 673 Supplemental Operating Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities 6,551 ROU assets obtained in exchange for lease obligations 11,625 Weighted Average Lease terms and discount rates Remaining lease term 8.1 Discount rate 5.0 % Future undiscounted lease payments for our operating lease liabilities, and a reconciliation of these payments to our operating lease liabilities at June 30, 2019 , are as follows: For the years ending March 31, Remaining 2020 $ 20,938 2021 30,305 2022 28,724 2023 24,507 2024 17,260 Thereafter 58,815 Total future lease payments 180,549 Less imputed interest (33,627 ) Total lease liabilities $ 146,922 |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Financial Statements are unaudited and include the accounts of the Company and its wholly-owned subsidiaries and, in our opinion, reflect all normal and recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows. Interim results may not be indicative of the results that may be expected for the full fiscal year. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of these Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in these Condensed Consolidated Financial Statements and accompanying notes. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions when appropriate. Actual results could differ materially from those estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), although we believe that the disclosures are adequate to make the information presented not misleading. These Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with our annual Consolidated Financial Statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 . Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Accounting for Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to the accounting for leases codified under Topic 842, Leases . The new lease accounting standard replaces all current U.S. GAAP guidance on this topic. The new standard, among other things, requires a lessee to classify a lease as either an operating or financing lease and to recognize a lease liability and a right-of-use (“ROU”) asset for its leases. On April 1, 2019, we adopted the new lease accounting standard using the alternative transition approach provided in ASU 2018-11, “Leases (Topic 842) - Targeted Improvements,” which allows initial application of the new standard using the modified retrospective method. As part of the adoption, the new lease accounting standard allows a number of practical expedients and exemptions. At transition, we elected the following: • The package of practical expedients, which allows us to carryforward our historical lease classification, assessment of whether a contract is or contains a lease and initial direct costs for any leases that exist prior to adoption of the new standard; • The practical expedient to not separate non-lease components from the related lease components; and • The exemption to not apply the balance sheet recognition requirements for leases with a lease term of 12 months or less and instead expense those costs on a straight-line basis over the lease term or in the period in which the obligation is incurred, if such costs are variable. As a result of the adoption, we have updated our significant accounting policy disclosure as set forth below to include our accounting policy under Topic 842 for transactions from April 1, 2019 and thereafter: Leases We determine if an arrangement is a lease at contract inception. 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. 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. Lease assets and liabilities are recognized based on the present value of future lease payments over the lease term at the commencement date. Included in the lease liability are future lease payments that are fixed, in-substance fixed, or payments based on an index or rate known at the commencement date of the lease. Variable lease payments are recognized as lease expenses as incurred. The operating lease ROU asset also includes any lease payments made prior to commencement, initial direct costs incurred, and lease incentives received. All ROU assets are reviewed for impairment. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate in determining the present value of future lease payments. The incremental borrowing rate represents the rate required to borrow funds over a similar term to purchase the leased asset and is based on an unsecured borrowing rate and risk-adjusted to approximate a collateralized rate at the commencement date of the lease. In determining our lease liability, the lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise such option. For operating leases, the lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Lease modifications result in remeasurement of the lease liability. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term. Impact of adoption As a result of adopting Topic 842, the following adjustments, including reclassifying prepaid and deferred rent to ROU, were made to our Condensed Consolidated Balance Sheet at April 1, 2019: March 31, 2019 Adjustments April 1, 2019 ASSETS Prepaid expenses and other $ 186,688 $ (792 ) $ 185,896 Right-of-use assets $ — $ 118,799 $ 118,799 LIABILITIES AND STOCKHOLDERS' EQUITY Accrued expenses and other current liabilities $ 1,035,695 $ (2,976 ) $ 1,032,719 Lease liabilities $ — $ 18,937 $ 18,937 Non-current lease liabilities $ — $ 122,041 $ 122,041 Other long-term liabilities $ 229,633 $ (19,995 ) $ 209,638 The adoption of Topic 842 did not have an impact on our Condensed Consolidated Statements of Operation or Condensed Consolidated Statements of Cash Flows. Recently Issued Accounting Pronouncements Accounting for Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2019 (April 1, 2020 for the Company), with early adoption permitted. Certain disclosures in ASU 2018-13 are required to be applied on a retrospective basis and others on a prospective basis. We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements. |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | As a result of adopting Topic 842, the following adjustments, including reclassifying prepaid and deferred rent to ROU, were made to our Condensed Consolidated Balance Sheet at April 1, 2019: March 31, 2019 Adjustments April 1, 2019 ASSETS Prepaid expenses and other $ 186,688 $ (792 ) $ 185,896 Right-of-use assets $ — $ 118,799 $ 118,799 LIABILITIES AND STOCKHOLDERS' EQUITY Accrued expenses and other current liabilities $ 1,035,695 $ (2,976 ) $ 1,032,719 Lease liabilities $ — $ 18,937 $ 18,937 Non-current lease liabilities $ — $ 122,041 $ 122,041 Other long-term liabilities $ 229,633 $ (19,995 ) $ 209,638 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Net revenue by product platform | Net revenue by platform was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Console $ 434,814 $ 294,730 PC and other 105,645 93,252 Total net revenue $ 540,459 $ 387,982 Net revenue by product revenue and service and other was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Service and other 424,385 309,187 Product 116,074 78,795 Total net revenue $ 540,459 $ 387,982 Net revenue by full game and other revenue and recurrent consumer spending was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Recurrent consumer spending 314,858 241,030 Full game and other 225,601 146,952 Total net revenue $ 540,459 $ 387,982 Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: Digital online $ 427,781 $ 315,047 Physical retail and other 112,678 72,935 Total net revenue $ 540,459 $ 387,982 |
Net revenue by geographic region | We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows: Three Months Ended June 30, Three Months Ended June 30, 2019 2018 Net revenue recognized: United States $ 330,479 $ 221,411 International 209,980 166,571 Total net revenue $ 540,459 $ 387,982 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Segregation of all assets and liabilities measured at fair value on a recurring basis | The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which is measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. June 30, 2019 Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Balance Sheet Classification Money market funds $ 284,236 $ 284,236 $ — $ — Cash and cash equivalents Bank-time deposits 150,000 150,000 — — Cash and cash equivalents Commercial paper 180,196 — 180,196 — Cash and cash equivalents US Treasuries 24,987 24,987 — — Cash and cash equivalents Corporate bonds 18,598 — 18,598 — Cash and cash equivalents Corporate bonds 260,752 — 260,752 — Short-term investments Bank-time deposits 254,417 254,417 — — Short-term investments US Treasuries 35,448 35,448 — — Short-term investments Commercial paper 7,036 — 7,036 — Short-term investments Money market funds 620,397 620,397 — — Restricted cash Cross-currency swap 950 — 950 — Prepaid expenses and other Private equity 1,823 — — 1,823 Other assets Foreign currency forward contracts (112 ) — (112 ) — Accrued expenses and other current liabilities Total recurring fair value measurements, net $ 1,838,728 $ 1,369,485 $ 467,420 $ 1,823 March 31, 2019 Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Balance Sheet Classification Money market funds $ 389,936 $ 389,936 $ — $ — Cash and cash equivalents Commercial paper 39,246 — 39,246 — Cash and cash equivalents US Treasuries 25,449 25,449 — — Cash and cash equivalents Money market funds 565,461 565,461 — — Restricted cash Bank-time deposits 387,720 387,720 — — Short-term investments Corporate bonds 296,141 — 296,141 — Short-term investments US Treasuries 55,634 55,634 — — Short-term investments Commercial paper 4,990 — 4,990 — Short-term investments Cross-currency swap 791 — 791 — Prepaid expenses and other Private equity 1,823 — — 1,823 Other assets Foreign currency forward contracts (423 ) — (423 ) — Accrued and other current liabilities Total recurring fair value measurements, net $ 1,766,768 $ 1,424,200 $ 340,745 $ 1,823 |
MANAGEMENT AGREEMENT (Tables)
MANAGEMENT AGREEMENT (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
MANAGEMENT AGREEMENT | |
Schedule of restricted stock units granted | In connection with the 2017 Management Agreement, we have granted restricted stock units as follows: Three Months Ended June 30, 2019 2018 Time-based 92 86 Market-based(1) 168 158 Performance-based(1) IP 28 27 Recurrent Consumer Spending ("RCS") 28 26 Total—Performance-based 56 53 Total Restricted Stock Units 316 297 _______________________________________________________________________________ (1) Represents the maximum number of shares eligible to vest. |
SHORT-TERM INVESTMENTS (Tables)
SHORT-TERM INVESTMENTS (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of short-term investments | Our Short-term investments consisted of the following: June 30, 2019 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 254,417 $ — $ — $ 254,417 Available-for-sale securities: Corporate bonds 259,496 1,280 (25 ) 260,751 US Treasuries 35,388 64 (3 ) 35,449 Commercial paper 7,036 — — 7,036 Total Short-term investments $ 556,337 $ 1,344 $ (28 ) $ 557,653 March 31, 2019 Gross Cost or Gains Losses Fair Value Short-term investments Bank time deposits $ 387,720 $ — $ — $ 387,720 Available-for-sale securities: Corporate bonds 295,526 742 (127 ) 296,141 US Treasuries 55,656 27 (49 ) 55,634 Commercial paper 4,990 4,990 Total short-term investments $ 743,892 $ 769 $ (176 ) $ 744,485 |
Summary of the contracted maturities of short-term investments | The following table summarizes the contracted maturities of our short-term investments at June 30, 2019 : June 30, 2019 Amortized Fair Short-term investments Due in 1 year or less $ 468,915 $ 469,523 Due in 1 - 2 years 87,422 88,130 Total short-term investments $ 556,337 $ 557,653 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of gross notional amounts of foreign currency forward contracts | The following table shows the gross notional amounts of foreign currency forward contracts: June 30, 2019 March 31, 2019 Forward contracts to sell foreign currencies $ 72,538 $ 116,590 Forward contracts to purchase foreign currencies 42,544 87,793 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory balances by category | Inventory balances by category were as follows: June 30, 2019 March 31, 2019 Finished products $ 21,267 $ 24,847 Parts and supplies 2,580 3,353 Inventory $ 23,847 $ 28,200 |
SOFTWARE DEVELOPMENT COSTS AN_2
SOFTWARE DEVELOPMENT COSTS AND LICENSES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
SOFTWARE DEVELOPMENT COSTS AND LICENSES | |
Schedule of capitalized software development costs and licenses | Details of our capitalized software development costs and licenses were as follows: June 30, 2019 March 31, 2019 Current Non-current Current Non-current Software development costs, internally developed $ 6,543 $ 453,874 $ 14,809 $ 434,712 Software development costs, externally developed 3,574 175,537 3,655 168,381 Licenses 7,953 4,186 10,416 343 Software development costs and licenses $ 18,070 $ 633,597 $ 28,880 $ 603,436 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Liabilities, Current [Abstract] | |
Schedule of components of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: June 30, 2019 March 31, 2019 Software development royalties $ 760,928 $ 713,201 Compensation and benefits 65,324 73,695 Refund liability 53,724 65,853 Licenses 47,679 56,221 Marketing and promotions 31,235 42,390 Other 79,858 84,335 Accrued expenses and other current liabilities $ 1,038,748 $ 1,035,695 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Information related to availability on Credit Agreement | Information related to availability on our Credit Agreement was as follows: June 30, 2019 March 31, 2019 Available borrowings $ 198,336 $ 198,336 Outstanding letters of credit 1,664 1,664 |
EARNINGS PER SHARE ("EPS") (Tab
EARNINGS PER SHARE ("EPS") (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted loss per share | The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended June 30, 2019 2018 Computation of Basic earnings per share: Net income $ 46,280 $ 71,693 Weighted average shares outstanding—basic 112,621 112,941 Basic earnings per share $ 0.41 $ 0.63 Computation of Diluted earnings per share: Net income $ 46,280 $ 71,693 Add: interest expense, net of tax, on Convertible Notes — 95 Net income for diluted earnings per share calculation $ 46,280 $ 71,788 Weighted average shares outstanding—basic 112,621 112,941 Add: dilutive effect of common stock equivalents 1,107 3,044 Weighted average common shares outstanding—diluted 113,728 115,985 Diluted earnings per share $ 0.41 $ 0.62 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of components of accumulated other comprehensive loss | The following table provides the components of accumulated other comprehensive loss: Three Months Ended June 30, 2019 Foreign Unrealized Unrealized Unrealized Total Balance at March 31, 2019 $ (33,090 ) $ 600 $ (5,285 ) $ 586 $ (37,189 ) Other comprehensive income (loss) before reclassifications (8,797 ) 193 722 (7,882 ) Amounts reclassified from accumulated other comprehensive loss 1,083 1,083 Balance at June 30, 2019 $ (41,887 ) $ 600 $ (4,009 ) $ 1,308 $ (43,988 ) Three Months Ended June 30, 2018 Foreign Unrealized Unrealized Unrealized Total Balance at March 31, 2018 $ (4,287 ) $ 600 $ (10,191 ) $ (1,854 ) $ (15,732 ) Other comprehensive income (loss) before reclassifications (26,817 ) — 9,585 409 (16,823 ) Amounts reclassified from accumulated other comprehensive loss — — (8,460 ) — (8,460 ) Balance at June 30, 2018 $ (31,104 ) $ 600 $ (9,066 ) $ (1,445 ) $ (41,015 ) |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of operating leases | Information related to our operating leases are as follows: Three Months Ended Lease costs Operating lease costs 7,008 Short term lease costs 673 Supplemental Operating Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities 6,551 ROU assets obtained in exchange for lease obligations 11,625 Weighted Average Lease terms and discount rates Remaining lease term 8.1 Discount rate 5.0 % |
Schedule of future undiscounted lease payments for our operating lease | Future undiscounted lease payments for our operating lease liabilities, and a reconciliation of these payments to our operating lease liabilities at June 30, 2019 , are as follows: For the years ending March 31, Remaining 2020 $ 20,938 2021 30,305 2022 28,724 2023 24,507 2024 17,260 Thereafter 58,815 Total future lease payments 180,549 Less imputed interest (33,627 ) Total lease liabilities $ 146,922 |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Balance Sheet) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Apr. 01, 2019 | Mar. 31, 2019 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Prepaid expenses and other | $ 220,324 | $ 185,896 | $ 186,688 |
Right-of-use assets | 124,859 | 118,799 | 0 |
Accrued expenses and other current liabilities | 1,038,748 | 1,032,719 | 1,035,695 |
Lease liabilities | 21,794 | 18,937 | 0 |
Non-current lease liabilities | 125,128 | 122,041 | 0 |
Other long-term liabilities | $ 190,664 | $ 209,638 | 229,633 |
Previously Reported | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Prepaid expenses and other | 186,688 | ||
Right-of-use assets | 0 | ||
Accrued expenses and other current liabilities | 1,035,695 | ||
Lease liabilities | 0 | ||
Non-current lease liabilities | 0 | ||
Other long-term liabilities | 229,633 | ||
Adjustments | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Prepaid expenses and other | (792) | ||
Right-of-use assets | 118,799 | ||
Accrued expenses and other current liabilities | (2,976) | ||
Lease liabilities | 18,937 | ||
Non-current lease liabilities | 122,041 | ||
Other long-term liabilities | $ (19,995) |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Disaggregated Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue from External Customer [Line Items] | ||
Total net revenue | $ 540,459 | $ 387,982 |
Service and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 424,385 | 309,187 |
Product | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 116,074 | 78,795 |
Recurrent consumer spending | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 314,858 | 241,030 |
Full game and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 225,601 | 146,952 |
Console | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 434,814 | 294,730 |
PC and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 105,645 | 93,252 |
Digital online | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | 427,781 | 315,047 |
Physical retail and other | ||
Revenue from External Customer [Line Items] | ||
Total net revenue | $ 112,678 | $ 72,935 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS (Geographical) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 540,459 | $ 387,982 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | 330,479 | 221,411 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 209,980 | $ 166,571 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |||
Contract with liability | $ 848,182 | $ 864,360 | |
Contract with liability recognized | 330,421 | ||
Contract asset | 62,145 | $ 57,643 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Remaining obligation | $ 958,985 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Remaining obligation period | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Remaining obligation | $ 1,042,083 |
FAIR VALUE MEASUREMENTS - ASSET
FAIR VALUE MEASUREMENTS - ASSETS MEASURED AT FAIR VALUE (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Assets measured at fair value on a recurring basis | ||
Short-term investments | $ 557,653 | $ 744,485 |
Restricted cash | 620,397 | 565,461 |
Total recurring fair value measurements, net | 1,838,728 | 1,766,768 |
Cross-currency swap | ||
Assets measured at fair value on a recurring basis | ||
Prepaid expenses and other | 950 | 791 |
Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Private equity | (112) | (423) |
Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 260,752 | 296,141 |
Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 254,417 | 387,720 |
US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 35,448 | 55,634 |
Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 7,036 | 4,990 |
Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 284,236 | 389,936 |
Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 150,000 | |
Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 180,196 | 39,246 |
US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 24,987 | 25,449 |
Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 18,598 | |
Quoted prices in active markets for identical assets (level 1) | ||
Assets measured at fair value on a recurring basis | ||
Restricted cash | 620,397 | 565,461 |
Total recurring fair value measurements, net | 1,369,485 | 1,424,200 |
Quoted prices in active markets for identical assets (level 1) | Cross-currency swap | ||
Assets measured at fair value on a recurring basis | ||
Prepaid expenses and other | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 254,417 | 387,720 |
Quoted prices in active markets for identical assets (level 1) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 35,448 | 55,634 |
Quoted prices in active markets for identical assets (level 1) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 284,236 | 389,936 |
Quoted prices in active markets for identical assets (level 1) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 150,000 | |
Quoted prices in active markets for identical assets (level 1) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Quoted prices in active markets for identical assets (level 1) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 24,987 | 25,449 |
Quoted prices in active markets for identical assets (level 1) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Significant other observable inputs (level 2) | ||
Assets measured at fair value on a recurring basis | ||
Restricted cash | 0 | 0 |
Total recurring fair value measurements, net | 467,420 | 340,745 |
Significant other observable inputs (level 2) | Cross-currency swap | ||
Assets measured at fair value on a recurring basis | ||
Prepaid expenses and other | 950 | 791 |
Significant other observable inputs (level 2) | Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Private equity | (112) | (423) |
Significant other observable inputs (level 2) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 260,752 | 296,141 |
Significant other observable inputs (level 2) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Significant other observable inputs (level 2) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Significant other observable inputs (level 2) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 7,036 | 4,990 |
Significant other observable inputs (level 2) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Significant other observable inputs (level 2) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Significant other observable inputs (level 2) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 180,196 | 39,246 |
Significant other observable inputs (level 2) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Significant other observable inputs (level 2) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 18,598 | |
Significant unobservable inputs (level 3) | ||
Assets measured at fair value on a recurring basis | ||
Restricted cash | 0 | 0 |
Total recurring fair value measurements, net | 1,823 | 1,823 |
Significant unobservable inputs (level 3) | Cross-currency swap | ||
Assets measured at fair value on a recurring basis | ||
Prepaid expenses and other | 0 | 0 |
Significant unobservable inputs (level 3) | Foreign currency forward contracts | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 0 | 0 |
Significant unobservable inputs (level 3) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Short-term investments | 0 | 0 |
Significant unobservable inputs (level 3) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Significant unobservable inputs (level 3) | Bank-time deposits | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Significant unobservable inputs (level 3) | Commercial paper | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Significant unobservable inputs (level 3) | US Treasuries | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Significant unobservable inputs (level 3) | Corporate bonds | ||
Assets measured at fair value on a recurring basis | ||
Cash and cash equivalents | 0 | |
Other assets | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 1,823 | 1,823 |
Other assets | Quoted prices in active markets for identical assets (level 1) | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 0 | 0 |
Other assets | Significant other observable inputs (level 2) | ||
Assets measured at fair value on a recurring basis | ||
Private equity | 0 | 0 |
Other assets | Significant unobservable inputs (level 3) | ||
Assets measured at fair value on a recurring basis | ||
Private equity | $ 1,823 | $ 1,823 |
MANAGEMENT AGREEMENT (Details)
MANAGEMENT AGREEMENT (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Restricted stock units | ||||
Management Agreement | ||||
Stock-based compensation expense for non-employee awards | $ 5,545 | $ 4,517 | ||
2017 Management Agreement | Restricted stock units | Maximum | ||||
Management Agreement | ||||
Vesting requirement for market-based restricted stock | 75th | |||
2017 Management Agreement | Restricted stock awards | ||||
Management Agreement | ||||
Vested (in shares) | 209 | |||
Forfeited (in shares) | 20 | |||
Zelnick Media Corporation | ||||
Management Agreement | ||||
Consulting expense benefit | $ 1,670 | $ 1,705 | ||
Zelnick Media Corporation | 2014 Management Agreement | Time-based restricted units | ||||
Management Agreement | ||||
Granted (in shares) | 92 | 86 | ||
Zelnick Media Corporation | 2014 Management Agreement | Market-based restricted units | ||||
Management Agreement | ||||
Granted (in shares) | 168 | 158 | ||
Zelnick Media Corporation | 2014 Management Agreement | Performance-based restricted units | ||||
Management Agreement | ||||
Granted (in shares) | 56 | 53 | ||
Zelnick Media Corporation | 2014 Management Agreement | IP | ||||
Management Agreement | ||||
Granted (in shares) | 28 | 27 | ||
Zelnick Media Corporation | 2014 Management Agreement | Recurrent Consumer Spending (RCS) | ||||
Management Agreement | ||||
Granted (in shares) | 28 | 26 | ||
Zelnick Media Corporation | 2014 Management Agreement | Restricted stock units | ||||
Management Agreement | ||||
Granted (in shares) | 316 | 297 | ||
Zelnick Media Corporation | 2017 Management Agreement | ||||
Management Agreement | ||||
Annual management fee | $ 3,100 | |||
Zelnick Media Corporation | 2017 Management Agreement | Maximum | ||||
Management Agreement | ||||
Bonus per fiscal year based on the achievement of certain performance thresholds | $ 7,440 | |||
Zelnick Media Corporation | 2017 Management Agreement | Market-based restricted stock | ||||
Management Agreement | ||||
Measurement period | 2 years | |||
Vesting requirement for market-based restricted stock | 50th | |||
Zelnick Media Corporation | 2017 Management Agreement | Performance-based restricted units | ||||
Management Agreement | ||||
Measurement period | 2 years | |||
Percentage of grants earned | 50.00% | |||
Zelnick Media Corporation | 2017 Management Agreement | Restricted stock units | ||||
Management Agreement | ||||
Unvested portion of the shares of restricted stock granted | 613 | 526 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 556,337 | $ 743,892 |
Gross Unrealized Gain | 1,344 | 769 |
Gross Unrealized Losses | (28) | (176) |
Fair Value | 557,653 | 744,485 |
Bank-time deposits | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 254,417 | 387,720 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 254,417 | 387,720 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 259,496 | 295,526 |
Gross Unrealized Gain | 1,280 | 742 |
Gross Unrealized Losses | (25) | (127) |
Fair Value | 260,751 | 296,141 |
US Treasuries | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 35,388 | 55,656 |
Gross Unrealized Gain | 64 | 27 |
Gross Unrealized Losses | (3) | (49) |
Fair Value | 35,449 | 55,634 |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 7,036 | 4,990 |
Gross Unrealized Gain | 0 | |
Gross Unrealized Losses | 0 | |
Fair Value | $ 7,036 | $ 4,990 |
SHORT-TERM INVESTMENTS (Contrac
SHORT-TERM INVESTMENTS (Contracted Maturities) (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Debt Securities, Available-for-sale, Maturity, Amortized Cost, Rolling Maturity [Abstract] | ||
Amortized cost, Due in 1 year or less | $ 468,915 | |
Amortized cost, Due in 1-2 years | 87,422 | |
Cost or Amortized Cost | 556,337 | $ 743,892 |
Debt Securities, Available-for-sale, Maturity, Fair Value, Rolling Maturity [Abstract] | ||
Fair value, Due in 1 year or less | 469,523 | |
Fair value, Due in 1-2 years | 88,130 | |
Total fair value | $ 557,653 | $ 744,485 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Derivative [Line Items] | |||
Forward contracts to sell foreign currencies | $ 72,538 | $ 116,590 | |
Forward contracts to purchase foreign currencies | 42,544 | $ 87,793 | |
Derivative instrument not designated as hedging instruments, gain (loss), net | (3,298) | $ 2,404 | |
Cash Flow Hedging | Foreign currency forward contracts | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 115,641 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished products | $ 21,267 | $ 24,847 |
Parts and supplies | 2,580 | 3,353 |
Inventory | 23,847 | 28,200 |
Estimated product returns included in inventory | $ 439 | $ 491 |
SOFTWARE DEVELOPMENT COSTS AN_3
SOFTWARE DEVELOPMENT COSTS AND LICENSES (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Software development costs and licenses, Current | $ 18,070 | $ 28,880 |
Software development costs and licenses, Non-current | 633,597 | 603,436 |
Software development costs, internally developed | ||
Finite-Lived Intangible Assets [Line Items] | ||
Software development costs and licenses, Current | 6,543 | 14,809 |
Software development costs and licenses, Non-current | 453,874 | 434,712 |
Software development costs, externally developed | ||
Finite-Lived Intangible Assets [Line Items] | ||
Software development costs and licenses, Current | 3,574 | 3,655 |
Software development costs and licenses, Non-current | 175,537 | 168,381 |
Licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Software development costs and licenses, Current | 7,953 | 10,416 |
Software development costs and licenses, Non-current | $ 4,186 | $ 343 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Apr. 01, 2019 | Mar. 31, 2019 |
Liabilities, Current [Abstract] | |||
Software development royalties | $ 760,928 | $ 713,201 | |
Compensation and benefits | 65,324 | 73,695 | |
Refund liability | 53,724 | 65,853 | |
Licenses | 47,679 | 56,221 | |
Marketing and promotions | 31,235 | 42,390 | |
Other | 79,858 | 84,335 | |
Accrued expenses and other current liabilities | $ 1,038,748 | $ 1,032,719 | $ 1,035,695 |
DEBT - CREDIT AGREEMENT (Detail
DEBT - CREDIT AGREEMENT (Details) - USD ($) | Feb. 08, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 |
Credit Agreement | ||||
Credit Agreement | ||||
Maximum borrowing capacity | $ 200,000,000 | |||
Amount of additional borrowings by which maximum borrowing capacity may be increased | $ 250,000,000 | |||
Debt term | 5 years | |||
Available borrowings | $ 198,336,000 | $ 198,336,000 | ||
Outstanding letters of credit | 1,664,000 | $ 1,664,000 | ||
Interest expense and fees | $ 82,000 | $ 110,000 | ||
New Credit Agreement | Base rate | ||||
Credit Agreement | ||||
Interest rate at end of period | 5.50% | |||
New Credit Agreement | Base rate | Minimum | ||||
Credit Agreement | ||||
Interest rate added to base rate | 0.25% | |||
New Credit Agreement | Base rate | Maximum | ||||
Credit Agreement | ||||
Interest rate added to base rate | 0.75% | |||
New Credit Agreement | LIBOR | ||||
Credit Agreement | ||||
Interest rate at end of period | 2.40% | |||
New Credit Agreement | LIBOR | Minimum | ||||
Credit Agreement | ||||
Interest rate added to base rate | 1.125% | |||
New Credit Agreement | LIBOR | Maximum | ||||
Credit Agreement | ||||
Interest rate added to base rate | 1.75% | |||
Letter of Credit | ||||
Credit Agreement | ||||
Maximum borrowing capacity | $ 25,000,000 |
EARNINGS PER SHARE ("EPS") (Det
EARNINGS PER SHARE ("EPS") (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Computation of Basic earnings per share: | ||
Net income | $ 46,280 | $ 71,693 |
Weighted average shares outstanding—basic (in shares) | 112,621 | 112,941 |
Basic earnings per share (in dollars per share) | $ 0.41 | $ 0.63 |
Computation of Diluted earnings per share: | ||
Net income | $ 46,280 | $ 71,693 |
Add: interest expense, net of tax, on Convertible Notes | 0 | 95 |
Net income (loss) for diluted earnings (loss) per share calculation | $ 46,280 | $ 71,788 |
Weighted average common shares outstanding—basic (in shares) | 112,621 | 112,941 |
Add: dilutive effect of common stock equivalents (in shares) | 1,107 | 3,044 |
Weighted average common shares outstanding—diluted (in shares) | 113,728 | 115,985 |
Diluted earnings per share (in dollars per share) | $ 0.41 | $ 0.62 |
EARNINGS PER SHARE ("EPS") (Nar
EARNINGS PER SHARE ("EPS") (Narrative) (Details) - Restricted stock shares in Thousands | 3 Months Ended |
Jun. 30, 2019shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Restricted stock awards, vested (in shares) | 1,338 |
Restricted stock awards, granted (in shares) | 700 |
Restricted stock awards, canceled (in shares) | 41 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Changes in accumulated other comprehensive loss | ||
Balance | $ (37,189) | $ (15,732) |
Other comprehensive income (loss) before reclassifications | (7,882) | (16,823) |
Amounts reclassified from accumulated other comprehensive loss | 1,083 | (8,460) |
Balance | (43,988) | (41,015) |
Foreign currency translation adjustments | ||
Changes in accumulated other comprehensive loss | ||
Balance | (33,090) | (4,287) |
Other comprehensive income (loss) before reclassifications | (8,797) | (26,817) |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Balance | (41,887) | (31,104) |
Unrealized gain (loss) on forward contracts | ||
Changes in accumulated other comprehensive loss | ||
Balance | 600 | 600 |
Other comprehensive income (loss) before reclassifications | 0 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Balance | 600 | 600 |
Unrealized gain (loss) on cross-currency swap | ||
Changes in accumulated other comprehensive loss | ||
Balance | (5,285) | (10,191) |
Other comprehensive income (loss) before reclassifications | 193 | 9,585 |
Amounts reclassified from accumulated other comprehensive loss | 1,083 | (8,460) |
Balance | (4,009) | (9,066) |
Unrealized gain (loss) on available-for- sales securities | ||
Changes in accumulated other comprehensive loss | ||
Balance | 586 | (1,854) |
Other comprehensive income (loss) before reclassifications | 722 | 409 |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Balance | $ 1,308 | $ (1,445) |
BUSINESS REORGANIZATION (Detail
BUSINESS REORGANIZATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 386 | $ (242) |
Fiscal 2018 Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 386 | |
Fiscal 2018 Plan | Accrued Expenses and Other Current Liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserve | 3,698 | |
Fiscal 2018 Plan | Other long-term liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring reserve | $ 2,961 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Valuation allowance, increase (decrease) | $ 19,826 | |
Benefit from income taxes | $ (15,875) | $ (5,754) |
Effective rate | 25.50% | |
Tax benefits, geographic mix of earnings | $ 11,601 |
LEASES NARRATIVE (Details)
LEASES NARRATIVE (Details) | Jun. 30, 2019 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 1 year |
Renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 14 years |
Renewal term | 5 years |
LEASES OPERATING LEASES (Detail
LEASES OPERATING LEASES (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Lease costs | |
Operating lease costs | $ 7,008 |
Short term lease costs | 673 |
Supplemental Operating Cash Flows Information | |
Cash paid for amounts included in the measurement of lease liabilities | 6,551 |
ROU assets obtained in exchange for lease obligations | $ 11,625 |
Weighted Average Lease terms and discount rates | |
Remaining lease term | 8 years 1 month 6 days |
Discount rate | 5.00% |
LEASES FUTURE UNDISCOUNTED LEAS
LEASES FUTURE UNDISCOUNTED LEASE PAYMENTS (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
Remaining 2020 | $ 20,938 |
2021 | 30,305 |
2022 | 28,724 |
2023 | 24,507 |
2024 | 17,260 |
Thereafter | 58,815 |
Total future lease payments | 180,549 |
Less imputed interest | (33,627) |
Total lease liabilities | $ 146,922 |
Uncategorized Items - ttwo10q06
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 474,926,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 470,273,000 |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,653,000 |