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8. OTHER LONG-TERM ASSETS
On March 21, 2000, we acquired less than a 20% interest in Japanese developer,Yuke’s, which was privately held. In December 2001,Yuke’s had an initial
public offering of its common stock that is 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. For the fiscal year
ended March 31, 2004, the unrealized holding gain was $1.4 million which brings the carrying value of the investment to $4.6 million at March 31, 2004.
Due to the long-term nature of this relationship, this investment is included in other long-term assets in the accompanying balance sheets. For the
Transition 2003 and the years ended December 31, 2002 and 2001, the unrealized holding gain (loss) on the investment in Yuke’s Co., Ltd. was $1.1
million, ($1.0) million and $249,000, respectively. Under separate development agreements,Yuke’s will create exclusively for us certain World Wrestling
Entertainment wrestling games for the PlayStation 2 and GameCube.
During 2002, we loaned Minick Holding AG (“Minick”) $1.5 million. On January 24, 2003, the loan was converted to an equity investment in Minick. As
of March 31, 2004 we owned approximately 25% of the outstanding common stock of Minick. This investment is accounted for under the equity method.
Equity in net income for the fiscal year ended March 31, 2004 was $63,000. In April 2004 we purchased a controlling interest in Minick for an additional
$10.5 million. We will begin consolidating the balance sheet, statement of operations, stockholders’ equity and cash flows beginning in the June 30, 2004
quarter. Minick develops and operates interactive software applications for wireless devices such as Short Messaging Service (“SMS”), Enhanced Messaging
Service (“EMS”), and Multimedia Messaging Service (“MMS”), information, multimedia and voting applications. We will work with Minick to expand licensed
wireless gaming through their software applications. See Note 17.
On September 4, 2003 THQ Wireless launched Madtap.com, a multi-country portal enabling mobile phone users to download the latest Java games.
The portal is designed to handle multi-country billing options. Madtap.com was created and continues to be supported by Minick. In relation to this agree-
ment,THQ Wireless has paid Minick $33,000 from launch through March 31, 2004.
On June 13, 2001,T.HQ International Ltd. and HotGen Studios Ltd. entered into a Joint Venture Agreement pursuant to which T.HQ International Ltd. acquired
a 44% interest in Network Interactive Sports Limited (“NI Sports”), formerly wholly owned by HotGen Studios Ltd. In exchange for this interest, T.HQ
International Ltd. agreed to invest $3.3 million in cash. Goodwill, which resulted from the investment, net of accumulated amortization was $1.9 million at
December 31, 2001. In July 2002, we announced plans to discontinue operations and took a charge of $3.0 million, including the write-off of associated goodwill
of $1.9 million, in June 2002 for the write-off of this investment, which is included in other expenses in the accompanying statements of operations. Prior to
the write-off, this investment was included in other long-term assets in the accompanying balance sheet and was accounted for using the equity method. For
the year ended December 31, 2001, our equity in the net loss of the joint venture was immaterial and was included in general and administrative expenses
in the accompanying statements of operations. The financial statements of the joint venture are immaterial and have therefore not been included.
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THQ : 2004 : ANNUAL REPORT