THQ 2009 Annual Report Download - page 39

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March 31, 2009 and 2008 was $10.9 million and $11.6 million, respectively. The contingent tax liability
relates to tax positions taken in previously filed tax returns and similar positions expected to be taken in
our current year income tax returns. A portion of the contingent tax liability relates to fiscal years under
examination. On May 24, 2007 we received notification from the IRS that the Joint Committee on Taxation
had completed its review of our file and took no exception to the conclusions reached by the IRS. We have
evaluated the impact of the conclusions reached in the IRS examination in the FIN 48 measurement and
recognition process. We are currently under routine examination by the IRS for our income tax returns for
fiscal years 2004 through 2007 and by various state jurisdictions for fiscal years subsequent to 2003. We
expect some of these examinations to be concluded and settled in the next 12 months, however, we are
currently unable to estimate the potential impact to the liability for unrecognized tax benefits or the timing
of such changes. We do not anticipate any significant changes in the unrecognized tax benefits in fiscal
2010 related to the expiration of the statutes of limitations.
Recently Issued Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, ‘‘Fair Value Measurements’’ (‘‘FAS 157’’). FAS 157
provides a single definition of fair value, together with a framework for measuring it, and requires
additional disclosure about the use of fair value to measure assets and liabilities. In February 2008, the
FASB issued FASB Staff Position (‘‘FSP’’) FAS 157-2, ‘‘Effective Date of FASB Statement No. 157’’ which
defers the implementation for certain non-recurring, nonfinancial assets and liabilities from fiscal years
beginning after November 15, 2007 to fiscal years beginning after November 15, 2008, which will be our
fiscal year 2010. In October 2008, the FASB issued FSP FAS 157-3, ‘‘Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active’’ which clarifies the application of FAS 157
in a market that is not active. FSP FAS 157-3 is effective upon issuance, including prior periods for which
financial statements have not been issued. The statement provisions effective as of April 1, 2008 and July 1,
2008, did not have a material effect on our results of operations, financial position or cash flows. We
adopted the remaining provisions of this statement on April 1, 2009, and the adoption did not have a
material impact on our results of operations, financial position or cash flows.
FSP FAS 157-4, ‘‘Determining Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not Orderly (‘‘FSP FAS 157-4’’),’’
provides guidance on how to determine the fair value of assets and liabilities in an environment where the
volume and level of activity for the asset or liability have significantly decreased and re-emphasizes that the
objective of a fair value measurement remains an exit price. FSP FAS 157-4 is effective for interim and
annual periods ending after June 15, 2009, but entities may early adopt the FSP for the interim and annual
periods ending after March 15, 2009. The adoption is not expected to have a material impact on our results
of operations, financial position or cash flows.
In February 2007, the FASB issued SFAS No. 159, ‘‘The Fair Value Option for Financial Assets and
Financial Liabilities—Including an Amendment of FASB Statement No. 115’’ (‘‘FAS 159’’). FAS 159
permits an entity to choose to measure many financial instruments and certain other items at fair value at
specified election dates. Subsequent unrealized gains and losses on items for which the fair value option
has been elected will be reported in earnings. We adopted this statement on April 1, 2008 and did not
make this election for any of our existing financial assets and liabilities. As such, the adoption of this
statement did not have any impact on our results of operations, financial position or cash flows. The
Company did elect the fair value option for an asset acquired in the third quarter of fiscal 2009 (see
‘‘Note 2—Investments’’).
In May 2008, the FASB issued SFAS No. 162, ‘‘The Hierarchy of Generally Accepted Accounting
Principles’’ (‘‘FAS 162’’). FAS 162 is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements
that are presented in conformity with GAAP for nongovernmental entities. FAS 162 is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU
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