THQ 2005 Annual Report Download - page 82

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59
Cash, Cash Equivalents, Short-Term Investments, and Long-Term Marketable Securities
March 31,
2005 2004
(in thousands)
Cash and cash equivalents ................................................. $98,175 $81,242
Short-term investments
Availablefor sale....................................................... 209,378165,995
Held to maturity ....................................................... 23,620 5,802
Short-terminvestments ................................................... 232,998171,797
Long-term marketable securities ........................................... —24,320
Cash, cash equivalents, short-term investments and long-term marketable
securities.............................................................. $331,173 $277,359
Investments with original maturities greater than three months, but less than one year, are considered
short-term investments. We invest in highly liquid debt instruments with strong credit ratings. The carrying
amounts of the investments approximate fair value due to their short maturities. Unrealized gains and
(losses) are recorded as a separate component of accumulated other comprehensive income (loss) for
investments classified as available-for-sale.
We invest in marketable securities and classify the securities as available-for-sale under Statement of
Financial Accounting Standard (SFAS No. 115), “Accounting for Certain Investments in Debt and Equity
Securities.” In accordance with SFAS No. 115, available-for-sale marketable securities are accounted for at
market prices, with the unrealized gain or loss, less applicable deferred income taxes, shown as a separate
component of stockholders’ equity.
Short-term investments are primarily auction rate securities. The interest rates on these securities are
typically reset to market prevailingrates every 50 days or less, and in all cases every 90 days or less, but
have longer stated maturities. Despite the long-term nature of their stated contractual maturities, we have
the ability to quickly liquidate these securities. Short-term investments are classified as available-for-sale
and changes in the fair value are included in accumulated other comprehensive income (loss), net of
applicable income taxes in the consolidated financial statements. Prior to the end of fiscal 2005, we
classified auction rate securities as cash and cash equivalents. Prior period information was reclassified,
including the impact on cash flow from investing activities, to conform to the current year presentation.
There was no impact onnet income or cash flow from operating activities as a result of the reclassification.
We had $209.4 million of investments in auction rate securities as of March 31, 2005. In the previously
reported consolidated statement of cash flows for the year ended March 31, 2004, cash used in investing
activities related to these short-term investments of $166 million was included in cash and cash equivalents.
The realized gains from sales of available-for-sale securities were $130,000 and $126,000 for fiscal 2005 and
2004, respectively. There were no unrealized gains or (losses) from sales of available-for-sale securities for
fiscal 2005 and 2004, respectively except Yuke’s Co., Ltd. (“Yuke’s”) which is classified as available-for-
sale and is included in other long-term assets. At March 31, 2003 we reclassified $556,000 of unrealized
losses to net income (loss). The unrealized gains and (losses) on the investments insecurities for
Transition 2003 and the year ended December 31, 2002 were $44,000 and ($492,000), respectively. See
“Note 8—Other Long-Term Assets” for disclosure of activity related to Yuke’s.
Duringfiscal 2004 we acquired municipal bonds with maturities of greater than one year for $24.3 million.
These bonds are classified as held-to-maturity. Investments with a maturity greater than one year at the
time of purchase are considered to be long-term assets. During the fiscal year ended March 31, 2005, $24.3
millionof these marketable securities were reclassified as short-term investments due to their maturity
date being less than one year. As of March 31, 2005, the value of our long-term marketable securities was