THQ 2006 Annual Report Download - page 52

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44
fiscal 2005 as compared to fiscal 2004. The increase is primarily attributable to growth in our international
and wireless operations, as well as Sarbanes-Oxley compliance and professional fees. In addition, the
increase also includes $1.5 million of amortization expense for intangible assets obtained through the fiscal
2005 acquisitions of Relic and Blue Tongue, and the acquisition of a controlling interest in Minick during
fiscal 2005.
Other Income
Other income for fiscal 2004 consisted of a $4.0 million settlement of a dispute we had with our directors’
and officers’ insurance carrier related to a previous securities litigation settlement.
Income Taxes
The effective income tax rate was 19% for fiscal 2005 compared to 35% for fiscal 2004. The fiscal 2005
effective income tax rate benefited from the following two factors: (1) the recognition of $7.8 million of
research and development income tax credits claimed for prior years and (2)our estimate of current fiscal
year research and development income tax credits. Excluding the one-time benefit of $7.8 million, our
effective income tax rate for fiscal 2005 would have been 29%.
Minority Interest
Minority interest reflects the income allocable to equity interests in Minick whichare not owned by THQ.
In April 2004, we purchased an additional 25% of the outstanding common stock of Minick, bringing us to
a 50% ownership interest and control of Minick’s board of directors. As a result of this transaction, we
began consolidating the balance sheet, statement of operations and cash flows of Minick. Minority interest
included in our consolidated statement of operations was $261,000 for fiscal 2005 compared to zero for
fiscal 2004.
Liquidity and Capital Resources
March 31, 2006March 31, 2005Change
(In thousands)
Cash and cash equivalents ................................. $91,517 $98,175 $(6,658)
Short-terminvestments ................................... 280,120232,99847,122
Cash, cash equivalents and short-term investments ......... $371,637 $331,173 $40,464
Percentage of total assets.................................. 44% 44%
Year Ended March 31,
2006 2005 Change
(In thousands)
Cash provided by operating activities.............................. $ 42,789 $ 60,455 $ (17,666)
Cash usedin investingactivities................................... (85,882) (77,891) (7,991)
Cash provided by financing activities. .............................. 37,787 33,764 4,023
Effect of exchange rate changes on cash............................ (1,352) 605(1,957)
Net increase (decrease) in cash and cash equivalents............... $(6,658) $16,933 $(23,591)