Take-Two Reports $50 Million Net Loss

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Take-Two Interactive Software announced its results for the fiscal second quarter ended April 30.
For the second quarter, Take-Two reported a net loss of $50.37 million compared with a net loss of $8.19 million in the same quarter the previous year. A significant portion of the loss was non-cash charges of $24.3 million related to the cancellation of titles in development.

There was also a $2 million charge related to the closure of two studios, that will likely be followed in the next quarter by a charge of $3 million due to additional closures. The company does not expect to return to profitability until the holiday season.

As part of the report, Take-Two disclosed that the FTC has concluded its inquiry into Take-Two's advertising regarding the game Grand Theft Auto: San Andreas. The inquiry was concerned with the hidden content in the game (the "hot coffee" scandal) that ultimately resulted in a re-rating of the game. While no fines have been imposed, the company agreed to settle all pending FTC matters. Take-Two agreed to sufficiently disclose future ratings-related content (essentially, Take-Two promised to be good in the future or risk large fines). Take-Two also noted that it is still involved in several "hot-coffee"-related legal actions, including class-action lawsuits. There are also class-action lawsuits related to the decline in stock price (also resulting from "hot coffee" problems).

Take-Two's filing with the SEC including some interesting details on its recent business. For example, the filing confirmed that in November of 2005, Take-Two paid approximately $15.44 million for the acquisition of Firaxis ($12.5 million in stock together with development advances previously made to Firaxis). The company also verified that it paid approximately $4.21 million in cash for Irrational Studios in August of 2005 as well as $2 million in common stock. Those sums for Irrational are on top of advances already paid and deferred compensation.

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This page contains a single entry by Editor published on June 9, 2006 11:02 AM.

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