Take-Two board member resigns over management
"Grand Theft Auto" publisher says audit committee chair accused management of failing to keep board informed of key issues.
Take-Two, the company behind the controversial "Grand Theft Auto" urban-action game series, said in a filing on Wednesday that Audit Committee Chairwoman Barbara Kaczynski resigned from the board on Jan. 19. She also had been a member of the company's corporate governance committee.
Kaczynski's lawyer Bruce Baird laid out the reasons for her resignation in a letter to the company's attorney, which was part of Take-Two's regulatory filing Wednesday.
Baird said Kaczynski was concerned about "Take Two's discovery of illicit images depicted in its "Grand Theft Auto" video game, the Federal Trade Commission's investigation of Take-Two following that discovery, and various SEC inquiries directed at Take-Two and its employees."
More recently, during the preparation and delayed filing of the company's annual report, Kaczynski's concerns rose significantly "because of what she views as an increasingly unhealthy relationship between senior management and the board of directors," Baird said in the letter.
"Ms. Kaczynski felt that management failed to keep the board informed of important issues facing the company or failed to do so in a timely fashion," Baird added.
A Take-Two spokesman said: "The comments in the filing represent Ms. Kaczynski's personal point of view. We do not believe these views are shared by the other board members."
The company also said Wednesday that fiscal fourth-quarter revenue was $308.2 million and that net income was $19.2 million, or 27 cents per share--down from its year-earlier revenue of $438 million and net income of $62.6 million, or 91 cents. The numbers were unchanged from the previously announced preliminary results earlier this month.
A week ago, the company said that it had found "material weaknesses" in its accounting that did not change its reported financial results and asked for more time to file its annual report.
In that filing on Jan. 18, Take-Two said it did not maintain effective controls over the existence and valuation of its accounts payable related to inventory purchases. It also found it did not maintain effective controls over the accuracy of the amortization of its capitalized software development costs.
On Wednesday, Take-Two said it would file its annual report by the close of business on Feb. 1.
Take-Two in June paid $7.5 million to settle with the U.S. Securities and Exchange Commission, a move that closed a nearly four-year investigation into the video game maker's alleged fraudulent accounting practices. The company did not admit or deny wrongdoing.
Rockstar Games, a wholly owned subsidiary of Take-Two, was forced to pull "Grand Theft Auto: San Andreas" from store shelves last summer after it was discovered that sex scenes could be unlocked and viewed with a downloaded program.
Take-Two said Wednesday that Todd Emmel, a director since 2002, will serve as acting audit committee chairman and that director Robert Flug had been tapped as Take-Two's nonexecutive board chairman, a position that had been vacant.
Michael Malone, recently retired chairman of Liberty Media's DMX Music, joined its board as a new member.
Separately, Take-Two said a fire recently damaged the New York City offices of its 2K Games, Global Star and Joytech North America subsidiaries and that no employees were injured. The company is still determining the overall financial and operational impact of the fire, but does not expect it to have a significant effect on its business.