THQ 2006 Annual Report Download - page 26

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18
Regulatory Proceedings
Update on 2003 SEC inquiry. On July 11, 2003 we were informed by the staff of the Securities and
Exchange Commission (the “SEC”) that the SEC was conducting a non-public formal investigation
entitled “In the Matter of Certain Video Game Manufacturers and Distributors.” In connection with the
investigation, the SEC requested information from us and informed us that other companies in the video
game industry had received similar requests for information. The investigation was focused on certain
accounting practices, with specific emphasis on revenue recognition. The SEC advised us that its
investigation is non-public and should not be construed as an indication from the SEC or its staff that any
violations of the law have occurred, nor should it reflect negatively upon any person, entity or security. We
cooperated fully with the SEC in its investigation into this matter. Recently, we were advised by the SEC
staff that they have concluded their inquiry with respect to THQ and have no present intention to make an
enforcement recommendation.
Due to the early status of this litigation with WWE we cannot estimate a possible loss, if any. Games we
develop based upon our WWE license have contributed to approximately 15% of our net sales during each
of the three years in the period ended March 31, 2006. The loss of the WWE license would have a negative
impact on our future financial results.
Other
Additionally, we are involved in routine litigation arising in the ordinary course of our business. In the
opinion of our management, none of this pending routine litigation will have a material adverse effect on
our consolidated financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to avote of security holders during the fourth quarter of the fiscal year
covered by this Annual Report.