Take-Two Restates Financial Results, CFO Resigns, SEC Investigates

In December, the company announced it was going to restate its financial results for 2000 and the first three quarters of fiscal 2001 to correct accounting errors in which sales of products were recognized as revenue and later returned or purchased by the company. Take-Two lowered its reported fiscal 2000 revenues by $23 million, to $364 million. The company eliminated $3.8 million in net sales for unshipped products and $2.6 million in license revenue in 2000, and took a charge of $19.2 million for losses incurred by Gathering of Developers, which Take-Two acquired in April 2000. However, the company also increased revenues for the first three quarters of fiscal 2001 by $19 million, to $328 million. That leaves a descrepancy of about $4.3 million between the two periods' restatements, which the accountants will have to figure out. Shortly after releasing the revised numbers, the company said announced it was being investigated by the Securities and Exchange Commission, and announced that its Chief Financial Officer, Albert Pastino, resigned for "personal reasons." Take-Two said Pastino will be replaced by Karl Winters, who served as CFO of United Auto Group and worked for 10 years in Coopers & Lybrand's auditing unit. Today the company announced its Q4 2001 results, which ended October 31, and reported a loss of $5.3 million (15 cents per share). Last year Take-Two posted a net profit $8.7 million (27 cents per share). Sales were $123.3 million, up from $108.1 million a year earlier. There were some other nuggets about the company's business operations in its 10-K, which aren't frequently found in SEC filings: