Take-Two Interactive’s woes continued as the company disclosed in...

reported final results for its 4th quarter and fiscal year ended Oct. 31 that were unchanged from the preliminary results announced early this month (CED Jan 9 p8). The resignation came only one day after the company said it asked the SEC for a 15-day extension in the filing of its 10-K annual report as it worked to fix serious accounting flaws (CED Jan 19 p2). Kaczynski didn’t indicate in a letter to Take-Two why she resigned. But the company included in the filing a subsequent letter from her attorney, Bruce Baird, in which he pointed to the company’s mounting troubles over the past year. “During Ms. Kaczynski’s tenure as a board member and chair of the audit committee, several matters requiring the board’s attention caused Ms. Kaczynski concern,” Baird said. “These matters included Take Two’s discovery of illicit images depicted in its Grand Theft Auto videogame, the Federal Trade Commission’s investigation of Take-Two following that discovery, and various SEC inquiries directed at Take-Two and its employees.” He added that, “more recently, in connection with preparation of the 10-K and its late filing, Ms. Kaczynski’s concerns have risen significantly because of what she views as an increasingly unhealthy relationship between senior management and the board of directors -- in her experience, management’s interactions with the board were characterized by a lack of cooperation and respect.” She also “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 said. The discovery of controversial “Hot Coffee” sexual content in discs of the hit game Grand Theft Auto: San Andreas led to the Entertainment Software Rating Board changing the game’s rating from Mature to Adults Only (CED July 22 p7, July 21 p4). As a result, most major retailers pulled the game from their shelves until Take-Two released an edited version of the title once again rated M. Board member Todd Emmel is serving as acting audit committee chmn. now and Take-Two said it added ex-DMX Music Chmn. Michael Malone to its board to replace Kaczynski. Board member Robert Flug was also named non-exec. chmn. of the board on an interim basis. Take-Two’s board, therefore, remained at 7 members, it said. Harris Nesbitt analyst Edward Williams said in a research note “Take-Two continues to plod along with some difficulty as the management and board of directors attempt to steer the company through the challenging waters of a platform transition that have been made more difficult by poor decisions (or poor judgment) made by some employees at Take-Two.” But he said the company’s current low valuation as a result of the challenges provides “an opportunity for the stock to appreciate as the developers deliver what should be a good product lineup in 2006 and beyond.” Take-Two also said a recent fire damaged the Manhattan offices of its 2K Games, Global Star and Joytech N. America divisions. Although no employees were hurt in the fire, the company said it “temporarily relocated all of these employees” to its nearby hq “due to the significant damage sustained to these leased offices.” The employees are made up mostly of marketing and administrative personnel, along with a small number of product testing personnel, Take-Two said. The company said it was “still determining the overall financial and operational impact of the fire [but] does not expect any significant effect on its business.” The company said it expects to file its 10-K report by the close of business Feb. 1. Take-Two shares closed 4.1% lower at $17.03 in Thurs. trading.