THQ 2004 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2004 THQ annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 89

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89

14. STOCKHOLDERS RIGHTS PLAN
On August 15, 2001, the Board of Directors (the Board) approved an amended and restated Stockholders Rights Plan (the Plan). Each share of common
stock has one preferred stock purchase right (“Right”) associated with it. Pursuant to the Plan, each Right entitles the holder to buy one one-thousandth
(1/1000) of a share of a new series of preferred stock at an exercise price of $10, subject to adjustment. The Rights become exercisable 10 days after any
person or group acquires, or 10 business days after any person or group has announced its intention to commence a tender offer for, 15% or more of the
outstanding common stock.
In the event that any person or group acquires 15% or more of our outstanding common stock, each holder of a Right (other than such person or group)
will be entitled to purchase, at the exercise price, the number of shares of common stock having a current market value equal to two times the exercise
price of the Right.
If we are acquired in a merger or other business combination, each holder of a Right will be entitled to purchase, at the exercise price, a number of shares
of common stock of the acquirer having a current market value equal to two times the exercise price of the Right.
We may redeem the Rights at a redemption price of $.001 per right at any time until 10 days after the acquisition of 15% of our common stock. At any
time after a person or group has acquired 15% or more but less than 50% of our common stock, we may exchange all or part of the Rights for shares of
common stock at an exchange ratio of one share of common stock for each Right or 1/1000 of such new series of preferred stock per Right, subject to
adjustment. The rights expire on June 21, 2010.
15. COMMITMENTS AND CONTINGENCIES
Licenses and Software Development. We enter into contractual arrangements with third parties for the rights to intellectual property and for the
development of products. Under these agreements, we commit to provide specified payments to an intellectual property holder or developer. Assuming all
contractual provisions are met, the total future minimum contract commitment for contracts in place as of March 31, 2004 is approximately $113.8 million.
Advertising. We have certain minimum advertising commitments under most of our major license agreements. These minimum commitments generally range
from 2% to 12% of net sales related to the respective license. We estimate that our minimum commitment for advertising in fiscal 2005 will be $24.1 million.
Leases. We are committed under operating leases with lease termination dates to 2014. Certain leases contain rent escalations. Minimum future rent
payments pursuant to these leases as of March 31, 2004 are as follows:
Fiscal Year Ended March 31,
(In thousands) Facilities Equipment
2005 $ 4,395 $ 556
2006 4,422 329
2007 3,157 206
2008 3,223 37
2009 2,866 15
Thereafter 8,307 —
$ 26,370 $ 1,143
Rent expense was $4.5 million, $1.1 million, $3.4 million and $2.7 million for the fiscal years ended March 31, 2004, Transition 2003 and the years ended
December 31, 2002 and 2001, respectively.
78:79
THQ : 2004 : ANNUAL REPORT