TTWO Financials Followup - 10-K annual report late

You may remember my post earlier about the SEC serving TTWO and some of its executives with Wells notices. Something new has come up, and like the Wells notice it may not amount to anything or it may be a sign of some major problems.

TTWO’s fiscal year ends at the end of October. It’s required to file something called a 10-K form with the SEC that summarizes its financial year. They have ninety days to do so. Today’s day ninety, and they haven’t filed.

Now, they can file for an extension, and probably have, though there isn’t any news of that. Last year, they filed their 10-K on December 23rd.

Pretty much nothing but a proto-story right now, but there you go. As the last couple of GTA titles are a couple of my favorite games, I find it interesting.

My guess is they are being extra cautious about their numbers because of the SEC. Another angle might be that they didn’t do as well as expected in the quarter and are withholding the numbers as long as possible. I think it’s normal for companies to sit on the reports if they’re not as rosy as they’d like. It doesn’t seem like Max Payne 2 sold as well, though that’s just my take on the somewhat muted reaction the game has generated. I also wonder about RT3? RT2 actually charted at number 1 briefly when it was released, but I don’t recall seeing RT3 in the top ten. Manhunt doesn’t seem to have done well either.

Regardless, I bet Take 2 execs wish they’d had DNF in the retail channel by now.


Press releases, yes. SEC filings, no. Matthew is right, this is abnormal.

Wall Street is definitely reacting, the stock is down over 7% at the moment.

And to the Frictionless Insight people:

You’re welcome!

Ahhh, a news story/press release regarding this very subject matter (but it doesn’t really say anything or offer an explanation):

Video game publisher Take-Two Interactive Software Inc. (NasdaqNM:TTWO - News) has missed the deadline to file its annual report with securities regulators, the company said on Friday, prompting an almost 9 percent drop in its stock.

A Take-Two spokesman said the deadline for filing the company’s fiscal 2003 annual report with the U.S. Securities and Exchange Commission (News - Websites) was the close of business on Thursday. The company has until the close of business on Friday to file for an extension of the deadline, he added.

Banc of America Securities (News - Websites) analyst Gary Cooper, in a research note on Friday, said it was not clear if the delay in filing was tied to the Wells notices.

“However, the filing represents another problem that (Take-Two) has had with regard to its financial disclosure,” Cooper said. “We expect the stock to remain weak until (Take-Two’s) 10-K is released and management offers a justification for its delay.”

There’s always been rumors surrounding Take 2. Rumors of “bad things”. There’s no telling what this all means.

I’ve always wondered how they went from PC games publisher pushing GameTek titles to the firm they are today.


That link above has been updated.

Cool, now they’re restating earnings for the past 5 years. Guess that means they’ve also fired their accountants.

The nitty gritty:

Take-Two said the restatements, relating to new methods for recording reserves for price concessions, were expected to lower fiscal 2003 earnings per share by up to 4 cents but could boost fiscal 2002 earnings per share by up to 3 cents.
I guess they had some unliked way of recording discounted sales. It’s referring to a FASB ruling, I think.

Latest news, unrelated to the restatement of past earnings, Take Two warns that earnings will miss for the Christmas quarter. The consensus forecast was $1.10 per share, now Take Two is saying 70 cents. That’s a 36% difference.

Ouch, that’s big. Still, it’s profit, right?

If you’re an investor, I’d guess you’d be a bit concerned. There is no announced follow-up to GTA and DNF isn’t anything you can count on, so what is going to generate the sales for them this year?

If you’re an investor, you’re terrified. A $.40 miss from $1.10 is disaterous, and coupled with years of restating it’s time to duck and cover.

If you’re an investor, I’d guess you’d be a bit concerned. There is no announced follow-up to GTA and DNF isn’t anything you can count on, so what is going to generate the sales for them this year?

IIRC, they mentioned in their conference call last year that a GTA game would be coming this fall. I’m sure they will debut it at E3.