THQ 2007 Annual Report Download - page 85

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Thefollowing table shows what ournetincomeand incomeper sharewould have been forthe fiscal years
ended March 31, 2006 and 2005,had compensation cost for our stock-based compensation been measured
based on theestimated fair value at the grant dates in accordance with theprovisions of FAS 123 (in
thousands, except per shareamounts):
Fiscal Year Ended
March 31,
2006 2005
Net income—as reported .................................$32,106 $61,397
Add: Stock-based employeecompensation expense included
in reported netincome, netofrelated tax benefit........2,396 595
Deduct:Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of relatedtax benefit.............................(13,131) (17,058)
Net income—proforma ..................................$21,371 $44,934
Earnings per share:
Basic—as reported ..................................$0.51 $1.05
Basic—proforma...................................$0.34 $0.77
Diluted—as reported ................................$0.49 $1.02
Diluted—proforma.................................$0.33 $0.75
15.Stockholders Rights Plan
THQ’s stockholders holdtheir stock subject to an Amended andRestated Rights Agreement dated
August 22, 2001, as amended by the First Amendment to theAmended and Restated Rights Agreement,
dated as of April 9, 2002 (collectively,the“Rights Agreement”). Pursuant to the Rights Agreement, and as
adjusted pursuant to Section 11(p) of the Rights Agreementas aresultof the stock splits which occurred
on April 9, 2002 and on September 1, 2005, each share of THQ common stockis accompanied by four-
ninths (4/9) of apreferred stock purchase right (“Right”) which entitlestheregistered holder to purchase
four nine-thousandths (4/9000) of ashareof Series AJunior Participating Preferred Stock at an exercise
priceof $44.44. TheRights become exercisable10 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 theoutstanding common stock of THQ. In theevent thatany person or group acquires 15% or moreof
our outstandingcommon stock, each holder of a Right(other than such person or group) will be entitled
to purchase, at the exerciseprice, thenumber of shares of common stock having acurrent marketvalue
equal to two times theexercise price of the Right. If we are acquired in a merger or other business
combination, each registered holderof a Right will be entitledtopurchase, at the exercise price, a number
of shares of common stock of theacquirer having a current market value equal to two times theexercise
price of the Right.
TheBoard may redeem the Rightsat a redemption price of $0.001 per Right, subject to adjustment, at any
time until 10 days afterthe acquisitionof 15%or more of thecommon stock of THQ. At any time aftera
person or grouphasacquired15% or more butless than 50%of thecommon stock, theBoard may
exchange all or part of theRights for shares of common stock at an exchange ratio of 4/9 shares of
common stock for each Rightor four nine-thousandths (4/9000) of a share of Series A Junior Participating
Preferred Stock (“Preferred Stock”) per Right. The Rights expire on June 21,2010.
Pursuant to the Certificate of Designation, as amended (the “Certificate of Designation”), establishing the
Preferred Stock,effective as September 1, 2005: (i) each share of Preferred Stock is entitled to quarterly
dividends equalto 2,250 times the aggregate per share amount of alldividends declared on the common
stock,(ii) each share of Preferred Stock will be entitledto2,250votes on allmatters submittedtoavote of