THQ 2005 Annual Report Download - page 93

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70
8. Other Long-Term Assets
In addition to intangible assets See “Note 7—Intangible Assets,” other long-term assets include our
investment in Yuke’s. OnMarch 21, 2000, we acquired less than a 20% interest in a Japanese developer,
Yuke’s, which was privately held. In December 2001, Yuke’s had an initial public offering of its common
stock, which is now traded on the Nippon New Market in Japan. Accordingly, we account for this
investment under SFAS No. 115 “ Accounting for Certain Investments in Debt and Equity Securities ” as
available-for-sale. Unrealized holding gains and losses are excluded from earnings and are included as a
component of other comprehensive income until realized. The original cost of this investment was
$5.0 million. At March 31, 2003 the investment in Yuke’s was written down to $3.2 million due to an other
than temporary decline in the fair value of the investment. At March 31, 2004, the carrying value of the
investment in Yuke’s was $4.6 million. For the fiscal year ended March 31, 2005, the unrealized holding
gain was $3.6million, which brings the carrying value of the investment to $8.2 million at March 31, 2005.
Due to the long-term nature of this relationship, this investment is included in other long-term assets in the
consolidated balance sheet. Under separate development agreements, Yuke’s creates exclusively for us
certain World Wrestling Entertainment wrestling games for the PlayStation 2 and GameCube.
In November 2004, we acquired all intellectual property rights to the Juiced franchise, a street racing
property, including the Juiced videogame that we plan to release in the first quarter of fiscal 2006, for
$8.6 million in cash. Of the $8.6 million paid, we attributed $4.4 million to the intellectual property rights,
which is included in other long-term assets in the consolidated balance sheet, and attributed $4.2 million to
the current product under development which is included in software development in the consolidated
balance sheet. The amountattributed to the intellectual property rights will be amortized over the
estimated useful life of the franchise and the amount attributed to the current product under development
will be amortized consistent with our accounting policy described in Note 2.
9. Income Taxes
Income (loss) before provision (benefit) for income taxes consisted of:
Fiscal Year Ended March 31, Transition
Year Ended
December 31,
2005 2004 2003 2002
(In thousands)
United States .......................... $ 68,933 $ 46,115 $(5,871) $ 16,471
Foreign............................... 9,3229,121 (5,105) 3,284
$ 78,255 $ 55,236 $ (10,976) $ 1 9,755
The provision (benefit) for income taxes consists of the following:
Fiscal Year Ended March 31, Transition
Year Ended
December 31,
2005 2004 2003 2002
(In thousands)
Current
Federal............................ $6,160 $11,112 $(139) $ 6,742
State.............................. (2,428) 2,716—814
Foreign............................ 4,776 4,495 (1,960) 1,765
8,508 18,323 (2,099 ) 9,321
Deferred
Federal............................ 6,012 2,775 (1,295) (1,940)
State.............................. 1,113 319(125) (194)
Foreign............................ (429) (2,020) 229(426)
6,696 1,074 (1,191 ) (2,560)
Provision (benefit) for income taxes..... $15,204 $19,397 $(3,290) $ 6,761