THQ 2004 Annual Report Download - page 63

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include the accounts of THQ Inc. and our wholly owned subsidiaries. Investments in
business entities in which we do not have control, but have the ability to exercise significant influence over operating and financial policies (generally
20-50% ownership), are accounted for by the equity method. All material intercompany balances and transactions have been eliminated in consolidation.
Foreign Currency Translation. Assets and liabilities of foreign operations are translated at current rates of exchange while results of operations are trans-
lated at average rates in effect for the period. Translation gains or losses are shown as a separate component of accumulated other comprehensive income
(loss). The translation gain (loss) on long-term intercompany balances included in the foreign currency translation was $2.3 million for the fiscal year ended
March 31, 2004. The translation gain (loss) on long-term intercompany balances included in the foreign currency translation was ($0.4) million, $1.8 mil-
lion and ($0.6) million for the Transition 2003 and the years ended December 31, 2002 and 2001, respectively. Foreign currency transaction gains and loss-
es result from exchange rate changes for transactions denominated in currencies other than the functional currency. For the fiscal year ended March 31,
2004 foreign currency transaction gain was $1.4 million and is included in general and administrative expenses. For the Transition 2003 and years ended
December 31, 2002 and 2001 foreign currency transaction gains (losses) were not material.
Cash, Cash Equivalents, Short-Term Investments, and Long-Term Marketable Securities
March 31, December 31,
(in thousands) 2004 2003 2002
Cash and cash equivalents $ 247,237 $ 199,860 $ 132,898
Short-term investments
Available for sale —12,143 44,940
Held to maturity 5,802 4,008 9,011
Short-term investments 5,802 16,151 53,951
Long-term marketable securities 24,320 ——
Cash, cash equivalents, short-term investments and long-term marketable securities $ 277,359 $ 216,011 $ 186,849
We consider all highly liquid investments purchased with maturities less than three months to be cash equivalents.
Investments with a maturity greater than three months, but less than one year, at the time of purchase are considered to be 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. For the fiscal year ended March 31, 2004 there were no unrealized gains or (losses) on available-for-sale investments, except
our investment in Yuke’s Co., Ltd. (Yuke’s) which is included in our other long-term assets in the accompanying balance sheet. See Note 8.
At March 31, 2003 we reclassified $556,000 of unrealized losses to net income (loss). The unrealized gains and (losses) on the investments in securities
for the Transition 2003 and years ended December 31, 2002 and 2001, were $44,000, ($492,000) and ($20,000), respectively. See Note 8 for disclosure
of activity related to Yuke’s.
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THQ : 2004 : ANNUAL REPORT