2K Sports 2008 Annual Report Download - page 24

and adopting a ‘‘poison pill’’. Other lawsuits may continue to be filed against us and our directors with
similar or additional allegations relating to our 2008 annual meeting of stockholders and the proxy
materials filed with the SEC and mailed to stockholders in connection therewith, the amendment to the
ZelnickMedia management agreement, EA’s unsolicited tender offer and/or its expiration, our adoption of
a ‘‘poison pill,’’ or our review of strategic alternatives.
Other Inquiries and Proceedings. We have received grand jury subpoenas issued by the District Attorney of
the County of New York and from certain state attorneys general relating to some of our products, our
historical stock option granting practices, the termination of our former auditors and other matters.
The investigations and charges against us or other current or former officers, directors or employees have
imposed, and are likely to continue to impose, significant costs on us financially. While we are unable to
estimate the exact nature or amount of these future costs, we believe they will likely include:
• damage to our reputation and business relationships;
• professional fees in connection with the conduct of the investigations and the defense of related
litigations and other proceedings;
• potential damages, fines, penalties or settlement costs imposed on us;
• advancement of certain expenses and reimbursement of certain amounts payable by, or on behalf
of, our current and former officers, directors and employees subject to the investigation or named in
any litigations or other proceedings pursuant to our indemnification obligations;
• potential impairment of our ability to obtain coverage and reimbursement under existing insurance
policies, and a potentially negative impact on our future insurance coverage; and
• potential impairment in our ability to raise capital.
Even if resolved favorably, such litigation or investigations could continue to be time consuming and could
continue to result in the diversion of the time and attention of our management team, any of which could
materially and adversely affect our business, results of operations and financial condition. Moreover, there
can be no assurance as to the reaction of our employees, stockholders, publishers, developers, customers,
distributors, licensors and other business partners to the institution or ultimate resolution of any such
proceedings.
If we acquire or invest in other businesses, intellectual properties or other assets, we may be unable to
integrate them with our business, our financial performance may be impaired or we may not realize the
anticipated financial and strategic goals for such transactions.
If appropriate opportunities present themselves, we may acquire or make investments in businesses,
intellectual properties and other assets that we believe are strategic. We may not be able to identify,
negotiate or finance any future acquisition or investment successfully. Even if we do succeed in acquiring
or investing in a business, intellectual property or other asset, such acquisitions and investments involve a
number of risks, including:
• retaining key employees and maintaining the key business and customer relationships of the
businesses we acquire;
• cultural challenges associated with integrating employees from an acquired company or business
into our organization;
• the possibility that the combined company would not achieve the expected benefits, including any
anticipated operating and product synergies, of the acquisition as quickly as anticipated or that the
costs of, or operational difficulties arising from, an acquisition would be greater than anticipated;
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