Cindi Buckwalter, Executive Vice President Karl Winters, Chief Financial Officer Paul Eibeler, President and Chief Executive Officer and Director

Mike Wallace, UBS John Taylor, Arcadia Mike Hickey, Janco Partners Elizabeth Osur, Citigroup Brent Thill, Prudential Equity Group Chris Kwak, SIG Arvind Bhatia, Southwest Securities Tom Andrews, Harris Nesbitt

Greetings ladies and gentlemen, and welcome to the announcement from Take-Two Interactive Yearend Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press “*” “0” on your telephone keypad. As a reminder, this conference is being recorded; it is now my pleasure, to introduce you host, Ms. Cindi Buckwalter, Executive Vice President of Take-Two interactive software. Thank you, Ms. Buckwalter, you may begin. Cindi Buckwalter, Executive Vice President: Thank you. Good afternoon and thank you for joining us today. Before we begin, I would first like to quickly review our Safe-Harbor statement, by reminding everyone that the statements made during this call that are not historical facts, but considered forward-looking statement under Federal Securities Laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us at this time. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings of the SEC including our 10-Q for the third quarter ended July 31, 2005 which maybe obtained from our website at www.take2games.com or by contacting SEC. Today’s call will consist of a presentation by our management team followed by a question and answer period. With me today from Take-Two are Paul Eibeler, our President and CEO and Karl Winters, our CFO. Today, Karl will review our preliminary Q4 and fiscal 2005 results and review our expectations for fiscal 2006. Then Paul will talk about our recent holiday releases and our product pipeline. Karl? Karl Winters, Chief Financial Officer: Thanks Cindi and good afternoon. As we announced today, our preliminary unaudited results for fiscal 2005 are 1.2 billion in revenue and $0.53 per share, compared to 1.1 billion in revenue and $0.95 per share last year. For Q4, our preliminary numbers are 308 million in revenue and $0.27 per share, compared to 438 million and $0.91 per share last year. These numbers are inline with the guidance we announced on October 31. In a moment, I will discuss our preliminary Q4 and fiscal 2005 results in more detail. First, let me briefly elaborate on why we are providing only preliminary numbers today. With the additional procedures and processes required for our first year of reporting under Sarbanes-Oxley, it has taken us a bit longer than usual to finalize our year-end results. Our 404 assessments are progressing as planned, but have added many extra hours of work and testing. Additionally, late in our fiscal year, we implemented a new inventory management software system related to our new Jack of All Games warehouse facility. And quite candidly, the implementation did not go as smoothly as planned. As a result, the year-end closing process took longer than anticipated. While we don’t expect any material changes from the preliminary numbers announced today, we did not think it was prudent to report our results as final until our work is complete. Moving on to some details about our Q4 results, revenue was down primarily due to the large comp we were up against from last year’s Q4 release of Grand Theft Auto: San Andreas for PlayStation 2. 236 million, or about 54% of last year’s Q4 total sales, came from that single title. This year in Q4, Grand Theft Auto: Liberty City Stories for PSP was our top title, representing approximately 12% of the quarter’s total revenue. The Warriors for PlayStation 2 and Xbox was also about 12% of sales in the quarter. And our other big release in Q4, Civilization IV, was approximately 7% of revenue. Several of our catalog titles were also meaningful contributors in the quarter. Grand Theft Auto: San Andreas for PlayStation 2, Xbox and PC was approximately 7% of Q4 revenue, while Midnight Club 3: DUB Edition for the PS2, Xbox and PSP was approximately 4% of total revenue. Our Jack of All Games business nearly doubled to 83 million from Q3 as they ramped up their hardware and software sales leading into the holiday season. However, their sales were down about 5% year-over-year. Jack’s business was impacted by the same types of challenges that the industry faced this holiday season, conservative ordering by retailers and lackluster demand. Jack’s strategy to improve fiscal 2006 performance encompasses several key areas. They are working to leverage their size by securing more exclusive distribution arrangements for valued products so that they can effectively become a single source supplier to retailers for valued content. They also continue to provide value-added services to customers, along with offering bundles of hardware, software and accessories. We believe that Jack will have interesting opportunities over the next few months as the hardware transition progresses. Our gross profit margin for the quarter was approximately 38%, compared to 39.7% last year. The primary reason for the decreased margin was related to our business mix, as our higher margin publishing sales represented a smaller percentage of revenue compared to last year’s fourth quarter. Our publishing/distribution split in the quarter was roughly 73% publishing and 27% distribution, compared to our publishing/distribution split of 80%/20% last year. Additionally, the higher percentage of Grand Theft Auto: San Andreas in last year’s fourth quarter was a significant contributor to our gross margin last year. Our operating expenses in the fourth quarter were approximately 95 million, the increase of about 24%, led by increases in the areas of G&A and R&D. Our G&A expenses were mostly driven by higher business and professional fees related to Sarbanes-Oxley compliance and legal matters, along with increased rent and new offices for the development studios we’ve acquired this year. The increase in R&D relates primarily to several development studio acquisitions. Our Q4 results also reflected a reduction in our reserve related to anticipated returns of Grand Theft Auto: San Andreas due to the temporary re-rating of the title over the summer. We had originally established $33 million reserve at July 31 for expected product returns. However, based on better-than-expected sell through of the title and lower than anticipated return processing costs, we have subsequently reduced this reserve, which favorably impacted our fourth quarter net sales by approximately 8 million and net income by approximately 7 million. Reserves as of October 31, included about 8 million for remaining unprocessed returns and handling costs related to San Andreas. Moving on to the full-year results, San Andreas was our top selling product for the year, representing about 32% of revenue, followed by Midnight Club 3: DUB Edition at about 8% of revenue. Our other top products were Grand Theft Auto: Liberty City Stories for the PSP and The Warriors at approximately 3% of sales each. Our publishing/distribution split for fiscal 2005 was roughly 71% publishing and 29% distribution, compared to our publishing/distribution split of 68 vs. 32% last year. Our gross profit margin for fiscal 2005 was about 34%, compared to 33.5% last year, primarily due to the greater percentage of publishing business this year. Additionally, publishing revenue in 2005 included a larger percentage of higher margin PC titles. Total operating expenses of approximately 377 million increased about 37% compared to fiscal 2004. The most significant year-over-year percentage variance was R&D expense, which related to our development studio acquisitions and incentive compensation related to key products that were shipped this year. As expected, and as we indicated on our third quarter conference call, we were cash flow negative in fourth quarter, which is consistent with last year, as we were gearing up for the peak holiday season in Q4 and many of our biggest holiday releases shipped in the last two weeks of the quarter. At the end of the fiscal year, we had about 107 million in cash, as compared to 155 million in cash at the end of last year. I would like to briefly review some of the other key balance sheet items. Net accounts receivable at the end of fourth quarter were approximately 198 million, compared to 62 million at the end of Q3 and 286 million at this time last year. Our DSOs in Q4 were approximately 58 days, compared to 33 days in the third quarter and 59 days in the fourth quarter last year. As I previously mentioned, our business in Q4 was heavily weighted toward the last month of the quarter, when we shipped most of our key holiday releases, leading to higher DSO levels. Our accounts receivable reserve stood at about 70 million at the end of the quarter, representing approximately 26% of gross receivables. Our Q4 reserves were approximately 15% of trailing six months revenue and about 10% of trailing nine months revenue, slightly higher than last year’s Q4 levels due to the approximately 8 million of remaining reserves related to anticipated returns of Grand Theft Auto: San Andreas, which I mentioned earlier. Inventories at the end of the quarter were approximately 136 million, an increase of about 32 million from Q3, but an $18 million decrease from last year due to our reduced business this holiday season. Our software development costs and licenses totaled about 119 million at the end of the year, compared to about 122 million at the end of last quarter and about 70 million at the end of last year. The increase in these costs since last year relates primarily to the significant ramp up in new products that we’ve signed for our 2K Games and 2K Sports labels. This is in line with the continued execution on our strategy of further expanding our portfolio breadth and depth. We currently have over 100 SKUs in various stages of development, representing over 50 different brands, of which the majority are planned for fiscal 2006 release. Moving on to guidance, we are revising our guidance for first quarter to 230 million to 250 million in net sales, primarily reflecting the disappointing holiday season results. The level of sales we anticipated for our titles, both current and next-gen, just didn’t materialize, due in part to the continued sluggish retail environment for video games and the lighter-than-expected Xbox 360 hardware shipments, along with the apparent delay in purchasing as consumers evaluated the new hardware platforms. We are also seeing some current-gen software pricing pressure industry wide that is impacting our expected results. And while we are pleased with the consumer response to Grand Theft Auto: Liberty City Stories for PSP, North American sales of the PSP hardware platform were lower than we expected for the holiday season, which impacted sales of our software titles. Our Q1 estimates are also being reduced by the movement of Top Spin 2 for multiple platforms and College Hoops 2K6 for Xbox 360 from Q1 to Q2 to allow more development time for these titles. On a positive note, we did see some pickup in business in late December. However, given retail’s conservative inventory management practices we mentioned in late October, which have continued through the holiday season, our inventory levels at retail are fairly light. With retailers reluctant to take on new inventory as many companies near the end of their January fiscal years, we are not confident that we can benefit significantly from any short-term increased consumer demand. At this point, without much visibility into the last few weeks of the quarter, we cannot provide a meaningful estimate of bottom-line performance. But given our expected volume, we anticipate reporting no loss. And to address our full fiscal year, while we are optimistic about the many opportunities presented to us over the next 12 to 18 months, various market dynamics have created uncertainty for us on many fronts, leading us to withdraw our guidance for the year. To be more specific, our fiscal 2006 coincides with a transitional period for our industry. Our results this year will be impacted by a variety of factors, including the launch of three major console platforms: The Xbox 360, which is just underway, the introduction of the PlayStation 3, which we believe will occur near the end of our fiscal year and the Nintendo Revolution sometime during calendar 2006. And with the PSP still in its infancy, it is difficult to predict the longer-term installed base of this platform and related software sales. Given the hardware transition, we think it’s important to maintain some flexibility in our quarterly release schedule so that we can be opportunistic in tailoring the timing of our releases to hardware availability, consumer acceptance and other factors. Additionally, due to the timing of our October fiscal year, our results for the year cover both the recent holiday period, as well as the beginning of the 2006 holiday season. For all of these reasons, we don’t believe that we can provide a meaningful forecast of our fiscal 2006 results at this point. Of course, we will be closely monitoring the industry developments as our fiscal year unfolds, and we will share with you as much incremental visibility as possible. Fiscal 2006 will certainly be a challenging year for both Take-Two and the industry as we transition to the new hardware platforms. However, we remain focused on our longer-term objectives, which we believe are key to ultimately driving shareholder value. We will continue to make significant investments in next-generation products and portfolio diversification, two of our most important corporate mandates. Rockstar is investing considerable resources in their fiscal 2007 lineup, including titles for the PlayStation 3, and 2K Games and 2K Sports continue to build their portfolio of sports and licensed products to capture market share in an area that represents a major source of potential growth for Take-Two. And while we will be investing heavily in our new products, we will continue to look for ways to reduce unnecessary expenses and market our products more effectively so that we can maximize our profitability during this transition period. At this point, I will turn the call over to Paul to provide more detail on our holiday releases, fiscal 2006 product lineup and additional corporate developments. Paul? Paul Eibeler, President, Chief Executive Officer and Director: Thanks Karl and thanks for joining us today. In fiscal 2005, Take-Two made progress in many strategic areas that will be important for our future. However, we recognize that our financial performance for the period was far from satisfactory. Our performance for the past fiscal year and continuing into Q1 ‘06 reflected a weaker-than-expected retail environment for video game software, a situation that has also impacted a number of other publishers in the industry. As Karl said, the major factor affecting industry wide software sales is the hardware transition. Although, ultimately this will be a major plus for the industry, the hardware transition has affected business in several ways. First, sales of titles for current-gen platforms have not met expectations. Consumer spending levels for video games have been affected by the anticipation of new hardware. With the buzz around both the Xbox 360 and upcoming hardware, we believe that some consumers have moved from current-generation software purchases, especially shown in Xbox 1 game sales. Second, tight supplies of the Xbox 360 have impacted sales of games for that platform. We are encouraged by the consumer reaction to the Xbox 360, the high attach rate and anticipation for additional shipments. In addition to the transition impact, we are facing tough comparisons with last year, when Grand Theft Auto: San Andreas drove consumers to the stores. Taking all of these factors into account, the result has been disappointing sales for the holiday period across much of the industry, resulting in lower-than-expected reorders from retailers. We still don’t have visibility into whether this trend will continue throughout January and ‘06. And while we remain confident in the long term growth prospects for the videogame industry and Take-Two in particular, it is difficult to forecast when these uncertain market conditions may change. As Karl discussed, we believe it would not be prudent to provide guidance for the full fiscal year. Turning over to our products, I want to emphasize that we are proud of the overall quality of our titles we published last year. Ratings for our front line holiday lineup were consistently above the front line ratings of other North American publishers, according to GameRankings and Metacritic scores. Our holiday releases averaged: 84 on GameRankings and 83 on Metacritic. I’d like to highlight a number of our key titles which not only reflect our most valuable resource, our creative talent, but also the growing diversity of our product line. Grand Theft Auto: Liberty City Stories has been a tremendous hit on the PSP. It was the number one selling title on the PSP platform in the US since launch in October and has also been a top seller in Europe since its launch. It received numerous awards, including: IGN’s PSP Game of the Year, PSP Best Story, PSP Best Action Game, to name a few. PSP title packs all the production value, freedom and open ended gameplay of the Grand Theft Auto franchise, a major accomplishment by: Rockstar Leeds and Rockstar North. We are excited about the extension of this title to console, as well as the next new Grand Theft Auto PSP title planned for later this fiscal year. Civilization IV, exclusively for the PC, has also been very well received, with average game ratings of 93%, according to GameRankings, and was named the 2005 PC Game of the Year, the Best Online Game of the Year, the Best Strategy Game of the Year by IGN. Although it launched only in the last week of October, it was the number one PC title in the US that month and moved up to the number two position in November. It has also been a top seller in Europe since its launch. NBA 2K6 and NHL 2K6, from our 2K Sports, have been standout products. The quality of both games is fantastic. The game ratings have significantly exceeded the competition across all platforms. Sales of NBA 2K6 on the Xbox 360 clearly show that consumers are receptive to high quality games. And NHL 2K6 is the only hockey title available for the 360. The Warriors has had strong North American and international sales. Rockstar’s new franchise, based on the cult film, has earned significant critical acclaim in the gaming press, receiving high scores and numerous awards. The Warriors has also received media praise from The New York Times, Newsweek and earned a place on Entertainment Weekly’s Top 10 must have List. In addition to the diversity of our holiday lineup, we were pleased to have three titles supporting the launch of the Xbox 360 with NBA 2K6 and NHL 2K6 and Amped 3 during our first quarter, while overall sales of these titles were less-than-expected, due to the limited hardware, we are proud that our internal development studios were able to support this new platform at launch with compelling, high quality products. We look to introduce other titles that exploit the potential of the 360 as its installed base grows. We remain focused on building our product release schedule, creating compelling content from our Rockstar, 2K Games, 2K Sports and Global Star labels. Later this month, we will ship Torino 2006 for PS2, Xbox and PC in advance of the Winter Olympics in Italy. Continuing into the second quarter, we have the highly anticipated Elder Scrolls IV: Oblivion for PC and 360 based on a worldwide distribution deal with Bethesda Softworks. College Hoops for 360, Top Spin 2 for 360, GBA and DS. From Global Star, we have titles based on popular brands such as Hummer, Sudoku. We are excited about launching Major League Baseball 2K6. This will be our first year as the exclusive third-party publisher of this multiplatform title. It will be the only baseball title available to the 360. For the remainder of the fiscal year, we have a strong pipeline to look forward to. We are pleased with our ability to bring Grand Theft Auto: Liberty City Stories to a console system tentatively planned for second quarter. We’re moving Bully out of Q2 and into second half of the fiscal year. Rockstar will have a new Xbox 360 title and two additional PSP titles, including, as previously announced, another all new Grand Theft Auto title for PSP. A sequel to a proven Rockstar franchise for current-generation console is also planned. From 2K, we will have Da Vinci Code on multiple platforms in conjunction with the feature film coming in May from Columbia Pictures directed by Ron Howard and starring Tom Hanks. Prey for PC and 360 from premier developers 3D Realms and Human Head. 24: The Game for PS2 in North America based on the Fox hit TV series. The long running popular game show Family Feud will be available on multiple platforms from Global Star and of course, NBA 2K7 and NHL 2K7 on multiple platforms. Our long term outlook for Take-Two and the industry remains unchanged, the cycle will provide additional opportunities due to the favorable demographics of our market, the growing popularity of interactive entertainment, and the increasing use of online applications and growing larger installed base of hardware. While the industry is now in a period of transition, we have made important investments in the past year that will place Take-Two in a strong position for the next phase of growth. We acquired highly regarded development studios with track records of success. Our acquisitions include Firaxis Games, with its pioneering game developer Sid Meier of Pirates! and Civilization fame. We also purchased Visual Concepts, Kush Games and Indie Built, giving us deep talent in the sports games business. We have built a viable sports business and proved that we can take market share in this important category. Our competitive position has been secured by the MLB third-party exclusives, long-term NBA agreement and our proprietary sports franchises. We continue to invest in our international business with plans to open additional offices in Europe and Asia. While 2006 remains a challenge for Take-Two and the industry, we believe that 2007 will be a strong year for the following reasons. We have repeatedly demonstrated our ability to create compelling, innovative content. We have made investments in creative talent and our internal development staff is now over 1100 as of the yearend. We have been successful in our efforts to build and leverage a more diversified publishing business. Our strong financial position gives us the resources to continue to invest in the future. Looking ahead to fiscal 2007, you’ll see a product flow consisting of sequels of some of our biggest franchises, as well as new brands. Again thank you for your time today, operator we will now open up the call to questions.

Thank you, ladies and gentlemen at this time, we will be conducting a question and answer session. If you would like to ask a question, please press “*” “1” on your telephone keypad. A confirmation tone will indicate that your line is the question queue. To remove your question from the queue, please press “*” “2”. For participants using speaker equipment, it maybe necessary for you to pickup your handset before pressing the “*” key. To allow everyone the opportunity to ask a question, please limit your time to one question. We will pause for a brief moment while we poll for questions. Our first question comes from the line of Mike Wallace of UBS. Please state your question. Q - Michael Wallace: Hi, Karl, I think you said the cash was 107 million. If that’s the number, it looks like it’s your lowest in about three years. Could you talk about where the cash is going, and what the issues are, and what it’s going to build up to looking out the next quarter or two? A - Karl Winters: Mike, certainly we’ve taken the opportunity, I think to invest in the 2K Sports and 2K Games business, and we’ve made a number of, I think very strategic acquisitions of studio talent in the pursuit of that strategy in addition to building the pipeline of product. And we mentioned we have over 100 SKUs in development and the majority will be coming in this fiscal year. I think that’s an important statement for the company to make, and it certainly should bode well for the longer-term when we see the hardware platforms maturing somewhat and providing us with a diversified portfolio. Now, that’s probably been the principal use of cash from our perspective and one that we have been very deliberate about. We certainly did have the stock buyback program earlier this year, and that also was a use of cash. I think for the near term, we expect our cash levels to be stable. Obviously, you know we have a very prudent eye on the future in terms of the business in the near term. But we believe we’ve got the adequate resources and liquidity to deal with the continued investment in the business and positioning us into later this year for another holiday season.

Our next question comes from the line of John Taylor of Arcadia. Q - John Taylor: Hi. Could you talk a little bit about the different labels that you’re publishing under, particularly Rockstar and 2K and Global, and then maybe, Jack, those four segments? And talk about kind of contribution margin expectations, if not in a recent period or an upcoming near-term period, at least kind of what goals you’re driving towards so that we can kind of get a sense of as those studios impact revenues kind of what that might imply for operating income? Thanks. A - Karl Winters: J.T. it’s, the labels vary, obviously, when we work from internal developed product, we’re going to typically get richer margins. So, for instance, the Rockstar, certain of the 2K Games studios that we’ve now taken in-house, we have a tendency to have less royalties and things like that to be paid to others. So, we would expect our true, sort of, publishing product on an internal footing to generate margins of 40% 50% or better, and it can get richer than that when you move to the PC platform, obviously. Within 2K, you have a range of margin there, again, depending on the relationships and whether or not we’re working under a franchised area that we have to pay further franchise fees on. So typically, it can reach towards 40%, it can be in the 20s, but in that type of range. Jack of All Games, the business line varies from hardware to frontline to value product, as we think of it. And the hardware margins are very thin. The frontline margins are a little better than that. And the value product ranges opportunistically, depending on how we procure product and under what terms and the demand for that particular product, and as you understand, usually product that’s a little older and more of a catalog in nature. So, we really cover it from top to bottom, full-blown publishing, we take things traditionally by strategy on an internal basis when we feel we want to have the complete creative control and freedom to manage that product from soup to nuts. And then the 2K Games, the Sports portfolios will be more of a mixed bag, and Jack of All Games is really value-driven business. Q - John Taylor: And as the mix of the GTA franchise within the Rockstar label goes up and down, is there kind of an inverse relationship with the contribution margin on that? A - Karl Winters: I’m sorry, I’m not sure I understood the first part of your question. A - Paul Eibeler: Well, GTA can be extremely profitable for us, if that’s what you mean by an inverse. Q - John Taylor: Yes. I’m thinking in terms of bonus accruals and all the other stuff that goes with that particular property, kind of, how it influences the mix? A - Karl Winters: I think we have incentive plans really across the board that drive all the business units and there’s certainly a cost associated with that. Better products typically have better incentive plans because they produce extraordinary results. A - Paul Eibeler: And Rockstar will, they did have a license this year with Warriors, but it was a smaller licensing type arrangement. It gave more the setting for the game and then the Rockstar team did their contribution in terms of the actual gameplay and making it into more of a story. In the 2K Games and 2K Sports groups, there’s a big diversity in terms of distribution deals that we have within that, like on Oblivion, Elder Scrolls II, some products like a Top Spin that we own that brand, and we own Amped and we’ll look to have other complementary sports products that we own. Now that we have Civilization and Firaxis and we own those brands, they will contribute differently as opposed to a rented brand. We are very excited about having Firaxis and their management helping us develop new brands throughout the 2K Games group. Just a little note on the Global Star, that’s our approach to the value-publishing end of the business and opportunistic type licensing, and two new additions have been the popular Sudoku and also Family Feud, which we think has some real long shelf life. We feed that into retail, as well as our Jack of All Games business, so, just one way of us exploiting some of our publishing leverage. Q - John Taylor: Thank you.

Our next question comes from the line of Mike Hickey of Janco Partners. Q - Michael Hickey: Hi, guys. Just a question on pricing pressure over the next fiscal period, fiscal year that is. Do you think that will extend to your Rockstar titles for current generation? Are you anticipating $40 price points for the extension of Liberty City Stories for whatever consoles, say, the PS2? And for the PlayStation 2 and PlayStation Portable, maybe to get some excitement back in current generation, do you see any price cuts there? A - Paul Eibeler: Right now, when you look at the past cycle, everyone is pretty pleased with how pricing held up throughout the cycle. This past Christmas presented some uncertainty and we think as we get into first half that we will see products being introduced probably not at the full price, depending on the title, going into more of a 39 price range. And that will depend on the pricing of the hardware for the console systems. PSP, again top quality titles will command top pricing. And just from what we’ve experienced on our 2K business with Xbox 360, we saw no price resistance at all to the higher 59 price point. Q - Michael Hickey: Thank you.

Our next question comes from the line of Elizabeth Osur of Citigroup. Please state your question. Q - Elizabeth Osur: Thanks. I had three unrelated questions. First, I was hoping maybe you could give us a little more detail on the distribution business, and what your plans are to turn things around there and whether or not you’d consider a sale of that business? A - Karl Winters: Do you want to list your questions, Liz, or you… Q - Elizabeth Osur: Sure. And then second was just whether or not you still expected the Sports business to be profitable this year? And third, was there any kind of expectation for the GTA franchise as a whole as a percentage of total revenues in fiscal 2006? A - Karl Winters: Just taking them backwards, Liz, I think the percentage on GTA, given the fact that we’ve retracted our guidance for the year, I think at this point it would probably be imprudent to really go in that direction. We certainly are pleased that we’ve extended that franchise onto different platforms and we’ve been able to work with PSP and then move to PlayStation 2. So, we continue to demonstrate, I think, a lot of dexterity with regard to that franchise, and that works very well for us. But, to get specific at this point, given sort of the market uncertainties that we alluded to earlier in the phone call, we’d be getting ahead of ourselves. The Sports business, we have every expectation that it can be profitable. We certainly had a strong performance there this year notwithstanding the fact that the marketplace was very challenging and price points moved I think very quickly. In the Jack of All Games business, as we alluded to also earlier on the call, we believe that Jack does participate, and quite profitably, as you get a little deeper into hardware platform launches. There is not a lot of room for profit participation when you’re working mostly with new hardware and new frontline releases. But today’s frontline releases age very quickly into value-type product and Jack participating in the marketplace at that level has been able to do that very profitably in the past. We believe that there continues to be strategic value in the ownership of the Jack business. However, we always look to opportunities in the future and we will be very, I think, prudent and cautious in evaluating whatever opportunities come along. Q - Elizabeth Osur: Can I ask just one follow-up, I don’t know if you’ll answer it, but with regard to the Jack business, could you give us some sense of what percentage hardware is in your expectations for the business or just what it was in fiscal 2005, just to give us some sense? A - Karl Winters: I don’t have that information right at my fingertips. We’ll let the call proceed and when we have it, I’ll announce it at that point. Q - Elizabeth Osur: Great, thanks. A - Paul Eibeler: Liz, just one comment. When you look at our distribution business, we are pleased right now with how it has performed in the past couple of months. It seems to be coming back. And again, we’re focused more on the bottom line, so we don’t place as much emphasis on the top line revenue, but really the bottom line contribution. And during the transition, there’s a real strong management team at Jack of All Games and they have performed well in the past. They have long years of history in this business and they know how to take advantage of transition periods where there’s a lot of value software and opportunities to add value-added services to the retail community. A - Cindi Buckwalter: And Liz, just to follow up on your question about the hardware sales component of Jack. It ran about one quarter of their business this year, and they really benefited from the PSP launch, which was a pretty significant factor for them this year. Q - Elizabeth Osur: Okay. Thanks a lot, guys.

Our next question comes from the line of Brent Thill of Prudential Equity Group. Q - Brent Thill: Karl, you spoke about the negative impact from the inventory management system. Is this the only issue that is holding up the final numbers or is there additional factors that are also surrounding this? A - Karl Winters: No, I would suggest that the inventory management system certainly did set us back in our timing overall for the processing of our final results. Having said that, working in the Sarbanes-Oxley environment certainly does add a certain amount of additional procedures and processes to the overall task, which is a large one to begin with. We along with other companies obviously deal with that, and this is our first year in this Sarbanes-Oxley environment in full. So, on the one hand, I would prefer not to have had the inventory situation that we had to deal with, but we’ve dealt with it, and we’re getting on with finishing things and expect to have that done shortly. Q - Brent Thill: Okay. And maybe, you could just give us a little color in terms of contrasting the experiences between developing for the PS3 and the 360? Any color that you can give us just in terms of the development methodologies, and how they are different, what you’re seeing early on? A - Paul Eibeler: I would say that our, both key studios that we have that are developing product internally, key groups between the Rockstar and the 2K are very, very excited about the hardware. In different ways, I mean the Sports business has more of a natural movement from one sequel to the next, annualizing it. And our Rockstar guys are particularly excited about what they can do and how they can bring their storytelling skills to the next level. And they really like both systems very, very much. So, I wouldn’t say there’s any distinct difference, there’s definitely distinct programming and talent required for the different systems. But, they’re both pleased with the capabilities and are very, very excited as we look out into 2007. Q - Brent Thill: Thanks.

Our next question comes from the line of Chris Kwak of SIG. Q - Chris Kwak: Great. Paul, can you just talk to Bully? You know, looking at it in second half. Should we assume that, to be on the safe side, that we’re looking at the latter portion of second half and not the early portion of second half? A - Paul Eibeler: What I would ask the people to assume is that Rockstar has a great storytelling ability that this game is about schoolyard antics, and given the uncertain retail or the uncertainties in the market, that we are just taking a real good look at the product. We’re giving it a lot of time to develop it. We are excited about the team that’s working on it. And when we think the right opportunity is in the market, we will launch the product. Q - Chris Kwak: And just on GTA, obviously there’s a lot of expectation for the brand on PSP going forward and also for LCS to come out on PS2. Anything you can tell us about the next iteration or the first iteration for next-gen consoles? It sounds like it’s not a fiscal ‘06 event; can we get a sense that maybe it is a fiscal ‘07 event? What’s the thinking there and how should we think about that? A - Paul Eibeler: When we, we are very, very protective of that brand. The Grand Theft Auto brand has a very, very high expectation in the marketplace from the consumer. We feel that we have done a great job with keeping that interest in that brand at a high level based on the rave reviews that we received on Liberty City Stories for PSP. We expect that game to continue at a pretty significant high sales velocity, because it has such a high attach rate to the PSP. We think there’s an opportunity to extend that now to the console market. What we have talked about is the next PSP game, which will be based on the Grand Theft Auto franchise later in our fiscal year. And then we haven’t made any announcements going forward, but we have a lot of development resources focused on that brand and we’ll continue to create extremely compelling content for the market and bring it out at the appropriate time. Q - Chris Kwak: One final question on the cash flows in terms of the use of cash approximately how much of it was for acquisitions, this quarter? A - Karl Winters: I think at this point, I probably should defer on that question, and we will print the cash flow in full here shortly. We’ve tried to touch on the broad points today, but I would say it was just significant. We had the acquisition of the 2K Sports studios. We also had the addition of certain studios within the 2K Games business throughout the year and it was certainly well north of, I think, $50 million throughout the year. And at this point, we’re very excited about the portfolio that we can now manage on an internal footing. Q - Chris Kwak: Great. Thank you.

Our next question comes from the line of Arvind Bhatia of Southwest Securities. Q - Arvind Bhatia: Hi, guys. Question on capitalized software; I think you gave some general idea there. But if you can talk about the short-term and long-term component there that you that was the number at the end of the quarter. And if you can give us a sense of how much of the cap software was for products that are in the market currently? And then next quick question is, I know you’re not willing to give any color on GTA as a percentage this year, but can you tell us if your expectations have changed at all in terms of units that you might be expecting? A - Karl Winters: Arvind, let’s take them in order. The cap software and the development costs for our pipeline, I gave the aggregate total of 119 million. We made the comment that that relates to 100 SKUs, 50 different brands and that the majority are planned for fiscal 2006. I think in keeping with the current vs. long-term perspective on the balance sheet, you could safely assume that the majority of that number would land in the current portion of the balance sheet, since it would relate to the timing of the release. With regard to Grand Theft Auto units, again, we are very pleased that we have been able to extend the Liberty City Stories into the PS2 environment. Certainly added units there, but again, we’re going to have to be somewhat cautious about getting behind units and precise dollar expectations because, and we certainly saw a platform or two during the current holiday season perform at different levels than I think anyone out there, in terms of writing, would have expected, and I don’t want to single out any one particular platform in that comment. But, it makes it very, very difficult to get on with a precise orientation of X number of units across all platforms for that brand in particular. A - Paul Eibeler: We are anxious to see how the PSP sales hold up first half and then going into the back half of the year when we introduce another Grand Theft Auto PSP product. But, it’s, we’re uncertain now as to how it will perform, the hardware, we know our software will perform very well against hardware sales with a high attach rate. We’re just being a little bit cautious right now. Q - Arvind Bhatia: Just one quick one. Paul, GameStop talked about improvements in December, you talked about that too. And in the past, when November was looking tough, I think the comments were that some of the edgier titles weren’t doing as well. Help us understand what you saw in December specifically in second half, what type of titles that you had did well? Were they the edgier titles? Were they more of the Sports titles? Just any color so we can understand where the strength might be coming from. A - Paul Eibeler: Well, the edgier titles, I believe, definitely had a little bit of lackluster performance, where you saw, particularly in that GameStop, they performed very well because they had a breadth of a lot of titles and they kept ordering throughout the holiday season. Our products that were at retail performed very well at retail, but a number of retailers, kind of, put the halts on things and slowed up their reordering process. I think the consumer who buys the edgier products was a little bit more focused than we all believed on next-gen in terms of the 360 and the Sony PlayStation 3 buzz that was out in the marketplace and that’s something that we missed. Those are more short-term indicators. We think long-term that, if you look at 360, the tremendous response to that, the high attach rate of software, the buzz that’s out in the marketplace bodes very, very well long-term. That would be my color. I know that in the case of GameStop, they performed very well because the PSP was new to them and they saw a nice market share on some of the DS products, which we don’t participate as heavily on, and it’s one area that we think there is a growth opportunity. Q - Arvind Bhatia: Can you give us some specific titles that picked up in the latter half of December? A - Paul Eibeler: It was across the board. Our titles, there was a Christmas, it just came later and was smaller than we thought. PSP sales, the attach rate was very, very strong on Grand Theft Auto; we saw Midnight Club attach rate selling very well; Civilization sold very well, the PC consumer, slightly different, some of the PC retailers are a little bit different. Q - Arvind Bhatia: Let me slide in one more, Paul. No guidance I know for 2006, but help us get some broad range, are we talking, you know we’re talking about growth vs. 2005, I’m sure, but just give us some idea. I know your past guidance was $1.15 to $1.45, and you were going to lower that. But just give us some sense of where maybe a broad stroke-type explanation of the shortfall there. A - Paul Eibeler: You know, when you issue no guidance, and I think we’ve done it prudently because of some of the uncertain market conditions. What we feel very good about is when we look at 2007, and we look at the installed base and the impact of next-gen hardware. But we are really being cautious and we have a lot of uncertainty in the marketplace, and I believe, as we get more confidence in the market and as we see some more structure and maybe some sales pick up or continued velocity on the hardware, we will get back to you with that. But as of now, it would not be prudent for me to give any broad strokes. Q - Arvind Bhatia: Not before the April call or… A - Paul Eibeler: When we think… Q - Arvind Bhatia: Or January… A - Karl Winters: We’ll have to evaluate it as we go, Arvind. Q - Arvind Bhatia: Okay, great. Thanks, guys. A - Cindi Buckwalter: Operator, we will take one more question, please.

Our next question comes from the line of Tom Andrews of Harris Nesbitt. Q - Thomas Andrews: Hello? A - Karl Winters: Hi, Tom. A - Paul Eibeler: Hi. Q - Thomas Andrews: Hi guys how are you? Just a couple of questions. Getting back to your cap software, 119 million, does that include products that are being developed externally, and if so, can we get a breakdown on external vs. internal? And then on inventory, can we get a breakdown on what portion is related to distribution? And of the distribution component, how that breaks down as far as price points? A - Cindi Buckwalter: Tom, just on your cap software question, yes, the cap software would include both internal and external game development. And, just in terms of if you look at roughly the SKU count, at least for our fiscal 2006 year; you’re probably talking about 60% of the titles being developed internally and 40% externally. Q - Thomas Andrews: Okay. A - Karl Winters: And then with regard to inventory, Tom, it’s about 60% related to our distribution business and approximately 40% on the publishing business. Q - Thomas Andrews: Okay, thanks. Cindi Buckwalter, EVP: Great thank you all for joining us today and we look forward to speaking with you again soon.

Ladies and Gentlemen, this concludes today’s teleconference. We thank you for your participation and you may disconnect your lines at this time.