Take-Two Announces Restructuring Plans, New CFO

Publisher Take-Two has announced its second quarter results, with sales down from $265m to $205m, and losses up slightly to $51.2m from last year, as well as a new restructuring plan and Lainie Goldstein named the company's new CFO. Take-Two said the sales decrease was due in part to last year's Q2 sales of The Elder Scrolls IV: Oblivion, offset by million plus sales of both Grand Theft Auto: Vice City Stories and Major League Baseball 2K7 this quarter. The quarterly losses were said to reflect improved margins on lower royalty costs, stronger margins on its sports products, and a realization of cost benefits from the prior year development studio closings and the absence of costs related to these closings, offset by reorganization and administrative fees associated with stock option grant investigations. Take-Two also announced a new comprehensive restructuring plan "designed to enhance the efficiency of the organizational structure, support a highly creative and financially disciplined product development process, increase operating margins and improve the Company's productivity and cost-effectiveness." The plan consists of the a number of elements. The company plans to restructure its international operations and "consolidate and align the marketing, sales and operational functions according to business discipline rather than geography to create a more efficient and responsive international organization." It also said it will "realign label and studio administrative functions to report to the respective departments at the corporate level," and "consolidate the management, marketing and business development operations of the 2K and 2K Sports labels on the West Coast." Finally, it said it would consolidate third-party PC distribution into North American sales. As a result, the company said it expects reduced overheads on the order of $25 million, to be realized by the end of fiscal 2008. The publisher also announced the appointment of Lainie Goldstein as permanent CFO, after holding an interim position. Goldstein joined Take-Two in 2003 and most recently held the position of senior VP of finance. The company outlined its forthcoming quarterly output as follows: All-Pro Football 2K8, Fantastic 4: Rise of the Silver Surfer, Manhunt 2, The BIGS and The Darkness in its third fiscal quarter, and BioShock, Carnival Games, Grand Theft Auto IV, NBA 2K8, and NHL 2K8 in its fourth. The lineup for fiscal 2008 was also outlined as follows: Beaterator, College Hoops 2K8, Grand Theft Auto IV - Episodic Content, L.A. Noire, Midnight Club: Los Angeles, Major League Baseball 2K8, NBA 2K9 and NHL 2K9. Said company chairman Strauss Zelnick, "When our management team took on a leadership role at Take-Two, we committed ourselves to making this the most creative, the most innovative and the most efficient company in our industry. We also pledged to our shareholders and employees that we would present a detailed action plan within our first 100 days. With over one month remaining, we have already made significant progress in assessing the organization and launching a major restructuring initiative. We look forward to communicating the full results of our 100 day plan in early July."