THQ 2008 Annual Report Download - page 59

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Licenses. Licenses decreased $4.3 million in fiscal 2008, from $91.1 million at March 31, 2007 to
$86.8 million at March 31, 2008. The decrease in licenses is due to amortization of our existing licenses,
partially offset by advance payments made to key licensors.
Software Development. Software development increased $16.9 million in fiscal 2008, from $164.3 million
at March 31, 2007 to $181.2 million at March 31, 2008. The increase in software development is primarily
the result of our investment in current generation cross-platform titles scheduled to be released in fiscal
2009 and beyond, partially offset by software amortization and royalties of titles released in fiscal 2008, as
well as cancellations of certain unreleased titles. Approximately 67% of the software development asset
balance at March 31, 2008 is for games that have fiscal 2009 release dates.
Accounts Payable. Accounts payable increased by $33.5 million from $28.2 million at March 31, 2007 to
$61.7 million at March 31, 2008. The increase in accounts payable is primarily due to an increase in
product purchases.
Accrued and Other Current Liabilities. Accrued and other current liabilities increased $58.7 million in
fiscal 2008, from $143.4 million at March 31, 2007 to $202.1 million at March 31, 2008. The increase in
accrued and other current liabilities is primarily due to the deferral of revenue from sales of Frontlines:
Fuel of War, as well as the withholding of payments due our venture partner, which will remain unpaid until
a new payment rate has been established as the old payment rate has expired. See ‘‘Item 3—Legal
Proceedings.’’
Inflation
We currently believe that inflation has not had a material impact on continuing operations.
Financial Condition
We believe the existing cash, cash equivalents, short-term investments, and cash generated from operations
will be sufficient to meet our operating requirements for at least the next twelve months, including working
capital requirements, capital expenditures and potential future acquisitions or strategic investments. We
may choose at any time to raise additional capital to strengthen our cash position, facilitate expansion,
pursue strategic investments or to take advantage of business opportunities as they arise. While the
Company has investments in auction rate securities which recently experienced an illiquid market, we do
not believe that any illiquidity in our long-term investments will impact our future cash needs. See
‘‘Note 2—Investment Securities’’ in the notes to the consolidated financial statements for further
information related to our investments.
Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties described in
Item 1A ‘‘Risk Factors’’ in this Annual Report on Form 10-K.
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