THQ 2012 Annual Report Download - page 17

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retain qualified employees. None of our employees are represented by a labor union or covered by a collective bargaining
agreement and we consider our relations with employees to be favorable.
Financial Information About Geographic Areas
See Part II—Item 7, "Management Discussion and Analysis of Financial Condition and Results of Operations" and "Note 20 —
Segment and Geographic Information" in the notes to the consolidated financial statements included in Part II—Item 8.
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange
Commission ("SEC"). Our SEC filings, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act are
available to the public free of charge over the Internet at our website at http://www.thq.com or at the SEC's web site at
http://www.sec.gov. Our SEC filings will be available on our website as soon as reasonably practicable after we have
electronically filed or furnished them to the SEC. Information contained on our website is not incorporated by reference into
this 10-K. You may also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street,
NE, Washington D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. You can view our Code of Business Conduct and Ethics, our Code of Ethics for Executive Officers and
Other Senior Financial Officers and the charters for each of our committees of the Board of Directors free of charge on the
corporate governance section of our website.
Item 1A. Risk Factors
Our business is subject to many risks and uncertainties that may impact our future financial performance. Some of those
important risks and uncertainties that may cause our operating results to vary or may materially and adversely impact our net
sales, operating results and cash flows are described below. These risks are not presented in order of importance or probability
of occurrence.
We have incurred operating losses during the last five fiscal years. We have restructured our business operations in order to
adjust our cost structure to better align with our expected future business; however, we may continue to incur losses in the
future.
We have had operating losses during the last five fiscal years. In fiscal 2012, we exited development of traditional
kids' and movie-based licensed console games and revised our strategy to focus on our premium core franchises and to expand
our digital revenues. As part of this business realignment, we implemented initiatives to streamline our organization and
reduce our cost structure. We expect these actions to result in annualized reductions in our expenditures that will align with our
expected lower levels of future net sales and thus allow us to become profitable; however, in the event our future net sales or
required expenditures differ from our expectations for any reason, we may continue to incur losses in the future. In addition,
there can be no assurance that we will be able to grow our net sales in future years.
We may require additional capital to fund our planned business operations.
Development of quality products requires substantial up-front expenditures and thus we expect to utilize a substantial
portion of our existing cash and cash equivalents and other working capital to develop our upcoming products. In addition to
our cash and cash equivalents, we have a $50.0 million credit facility that we expect to draw against in order to fund our
business operations. We believe we have adequate resources to execute on our product plan and deliver our multi-year pipeline
of games; however, there can be no assurance that we will be able to do so without additional capital. In the event our future
net sales or required expenditures differ from our expectations for any reason, and our external liquidity sources, including our
credit facility and vendor credit terms, are not sufficient to meet our operating requirements, we may need to defer and/or
curtail currently-planned expenditures, cancel projects currently in development, and/or pursue additional funding or additional
external sources of liquidity, which may not be available on financially attractive terms, if at all, to meet our cash needs.
Our stock currently fails to meet the Nasdaq continued listing requirements. If we fail to regain compliance with continued
listing requirements, our stock may be delisted.
On January 25, 2012, we received a written notification from Nasdaq notifying us that we fail to comply with Nasdaq's
Marketplace Rule 5450(a)(1) (the “Rule”) because the bid price for our common stock, over the last 30 consecutive business
days, has closed below the minimum $1.00 per share requirement for continued listing. The notification had no immediate
effect on the listing of our common stock. In accordance with Marketplace Rule 5810(c)(3)(A), we have a period of 180
calendar days, or until July 23, 2012, to regain compliance with the Rule. If at any time before July 23, 2012, the bid price of