THQ 2009 Annual Report Download - page 52

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Interest and Other Income, net
Interest and other income, net consists of interest earned on our investments as well as gains and losses
resulting from exchange rate changes for transactions denominated in currencies other than the functional
currency. Interest and other income, net increased by $2.6 million in fiscal 2008 as compared to fiscal 2007.
The increase in fiscal 2008 was primarily due to higher average yields on higher average investment
balances.
Income Taxes
We recorded an income tax benefit of $35.8 million for fiscal 2008 as compared to income tax expense of
$26.2 million for fiscal 2007. The income tax benefit in fiscal 2008 reflects an effective tax rate of 49%,
which is higher than our statutory rate of 35%. The significant items that generated the variance between
our effective tax rate and the statutory tax rate for fiscal 2008 were (i) the partial release of the reserve on
previous years’ research and development tax credits, (ii) fiscal 2008 research and development tax credits,
and (iii) tax free interest income.
The income tax expense for fiscal 2007 reflects an effective income tax rate of 29%, which is lower than our
statutory rate of 35%. The significant items that generated the variance between our effective tax rate and
the statutory tax rate for fiscal 2007 were research and development tax credits and tax free interest
income.
Minority Interest and Discontinued Operations
Minority interest in fiscal 2007 reflects the income allocable to equity interests in Minick that are not
owned by THQ. Prior to December 1, 2006, we owned 50% of Minick’s outstanding common stock and
controlled its board of directors. On December 1, 2006, we sold our interest in Minick. As of March 31,
2008 we have received approximately $18.6 million in cash due to the sale of Minick. We recognized gains
of $1.5 million and $3.1 million in fiscal 2008 and fiscal 2007, respectively, related to the sale of Minick.
These gains are presented as ‘‘Gain on sale of discontinued operations, net of tax’’ in our consolidated
statements of operations. Pursuant to the Minick sale agreement, we may receive additional consideration
of approximately 1.2 million Euro during the three months ended June 30, 2008. If such amounts are
received, the additional gain recognized will be reported in discontinued operations in the period the
proceeds are collected. The results of Minick’s operations were not material to any of the periods
presented and have therefore not been reclassified as discontinued operations.
Liquidity and Capital Resources
(In thousands) March 31, 2009 March 31, 2008 Change
Cash and cash equivalents .......................... $131,858 $247,820 $(115,962)
Short-term investments ............................ 8,804 69,684 (60,880)
Cash, cash equivalents and short-term investments ...... $140,662 $317,504 $(176,842)
Percentage of total assets .......................... 24% 29%
Year Ended March 31,
(In thousands) 2009 2008 Change
Cash used in operating activities .......................... $(194,174) $ (9,714) $(184,460)
Cash provided by investing activities ....................... 59,533 105,820 (46,287)
Cash provided by financing activities ....................... 33,954 (26,513) 60,467
Effect of exchange rate changes on cash .................... (15,275) 3,479 (18,753)
Net increase (decrease) in cash and cash equivalents .......... $(115,962) $ 73,072 $(189,033)
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