THQ 2009 Annual Report Download - page 99

(4) Secured Credit Lines. In fiscal 2009 we obtained a line of credit with UBS and a margin account at
Wachovia Securities (now Wells Fargo & Company (‘‘Wells Fargo’’)). There were $21.4 million and
$3.0 million, respectively, outstanding on these secured credit lines as of March 31, 2009. See
‘‘Note 10—Secured Credit Lines’’ in the notes to the consolidated financial statements.
(5) Other. In fiscal 2008 and 2009 we entered into various international distribution agreements with one
to two year terms. Pursuant to the terms of these agreements, we had purchase commitments of
$2.4 million as of March 31, 2009. These commitments are included in the table above and are not
included in current liabilities in our March 31, 2009 consolidated balance sheet.
Pursuant to the terms of our acquisition of Universomo there is additional consideration of
$0.8 million included in accrued and other current liabilities in our March 31, 2009 consolidated
balance sheet and included in the table above.
(6) We have omitted unrecognized tax benefits from this table due to the inherent uncertainty regarding
the timing and amount of certain payments related to these unrecognized tax benefits. The underlying
positions have not been fully developed under audit to quantify at this time. As of March 31, 2009 we
had $10.9 million of unrecognized tax benefits. See ‘‘Note 14—Income Taxes’’ in the notes to the
consolidated financial statements.
Other potential future expenditures relate to the following:
Manufacturer Indemnification. We must indemnify the platform manufacturers (Microsoft, Nintendo,
Sony) of our games with respect to all loss, liability and expenses resulting from any claim against such
manufacturer involving the development, marketing, sale or use of our games, including any claims for
copyright or trademark infringement brought against such manufacturer. As a result, we bear a risk that
the properties upon which the titles of our games are based, or that the information and technology
licensed from others and incorporated into the products, may infringe the rights of third parties. Our
agreements with our third-party software developers and property licensors typically provide
indemnification rights for us with respect to certain matters. However, if a manufacturer brings a claim
against us for indemnification, the developers or licensors may not have sufficient resources to, in turn,
indemnify us.
Indemnity Agreements. We have entered into indemnification agreements with the members of our Board
of Directors, our Chief Executive Officer and our Chief Financial Officer, to provide a contractual right of
indemnification to such persons to the extent permitted by law against any and all liabilities, costs,
expenses, amounts paid in settlement and damages incurred by the any such person as a result of any
lawsuit, or any judicial, administrative or investigative proceeding in which such person is sued as a result
of their service as members of our Board of Directors, Chief Executive Officer or as Chief Financial
Officer. The indemnification agreements provide specific procedures and time frames with respect to
requests for indemnification and clarify the benefits and remedies available to the indemnities in the event
of an indemnification request.
Litigation
WWE Related Lawsuits
WWE Federal Court Actions. On October 19, 2004, World Wrestling Entertainment, Inc. (‘‘WWE’’) filed a
lawsuit in the United States District Court for the Southern District of New York (the ‘‘Court’’) against
JAKKS Pacific, Inc. (‘‘JAKKS’’), us, THQ/JAKKS Pacific LLC (the ‘‘LLC’’), and others, alleging, among
other claims, improper conduct by JAKKS, certain executives of JAKKS, an employee of the WWE and an
agent of the WWE in granting the WWE videogame license to the LLC. The complaint sought various
forms of relief, including monetary damages and a judicial determination that, among other things, the
WWE videogame license is void. On March 30, 2005, WWE filed an amended complaint, adding both new
claims and our president and chief executive officer, Brian Farrell, as a defendant. On March 31, 2006, the
92