Investigation reveals "improprieties" in Take-Two practices
The special committee assigned by Take-Two's board of directors to investigate the publisher's stock option practices has found that errors did occur - but not due to any misconduct by chief executives.
The special committee assigned by Take-Two's board of directors to investigate the publisher's stock option practices has found that errors did occur - but not due to any misconduct by chief executives.
A statement issued by Take-Two says that a thorough investigation was conducted, "including a review and analysis of documents and emails, and interviews of current and former officers, directors, employees and advisors to Take-Two.
"The special committee found that there were improprieties in the process of granting and documenting stock options and that incorrect measurement dates for certain stock option grants were used for financial accounting purposes," the statement continues.
The investigation did not find evidence of any misconduct by CEO Paul Eibeler or CFO Karl Winters. The special committee now expects to produce a final report offering full details of its findings, along with "recommendations for remedial actions".
While Take-Two and its independent auditors review the committee's finding, the board of directors and management have decided to "restate historical financial statements to record non-cash cash charges for compensation expense relating to past stock option grants".
The amount of the charges, the resulting tax and accounting impact have yet to be determined, but Take-Two has warned that "all consolidated financial statements, earnings releases and similar communications issued by the company containing financial information for periods beginning 1997 through April 30, 2006 should no longer be relied upon".
The company also stated that, "Any non-cash stock-based compensation expense recorded will not affect the company's previously reported cash positions or revenues."
Take-Two's statement went on to confirm that the publisher has met with NASDAQ executives following a threatened delisting, and requested an extension to the deadline for filing its third quarter Form 10-Q. The company will remain on the NASDAQ while a decision is made.