THQ 2010 Annual Report Download - page 42

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In June 2009, we entered into a Loan and Security Agreement (the “Credit Facility”) with Bank of America,
N.A. (“B of A”), as agent, and the lenders party thereto from time to time. The Credit Facility provides for a
$35.0 million revolving credit facility, which can be increased to $50.0 million, subject to lender consent,
pursuant to a $15.0 million accordion feature, and includes a $15.0 million letter of credit subfacility. See
“Note 12—Credit Facility” in the notes to the consolidated financial statements included in Item 8 for
additional information regarding the Credit Facility. We may use the Credit Facility to provide us with working
capital and cash for other corporate purposes; however, our ability to borrow, and the lenders’ obligation to
lend, under the Credit Facility is subject to our compliance with certain terms and conditions, including a
requirement that we meet a minimum fixed charge coverage ratio. The borrowing capacity under the Credit
Facility fluctuates based upon our levels of U.S. accounts receivable, subject to standard deductions and
reserves. As of March 31, 2010 we had no borrowings under the Credit Facility and $35.0 million of available
borrowing capacity.
On August 4, 2009 we issued the Notes (see “Note 11—Convertible Senior Notes” in the notes to the
consolidated financial statements included in Item 8). After offering costs, the net proceeds to us were
$96.8 million. The Notes are due August 15, 2014, unless earlier converted, redeemed or repurchased. The
Notes pay interest semiannually, in arrears on February 15 and August 15 of each year, beginning
February 15, 2010, through maturity and are convertible at each holder’s option at any time prior to the close
of business on the trading day immediately preceding the maturity date. In fiscal 2010 we paid $2.7 million in
interest on the Notes and absent any conversions, we expect to pay $5.0 million in each of the fiscal years
2011 through 2014 and $2.5 million in fiscal 2015, for an aggregate of $25.2 million in interest payments
over the term of the Notes. The Notes are our unsecured and unsubordinated obligations. The Notes will be
redeemable, in whole or in part, at our option, at any time after August 20, 2012 for cash, at a redemption
price of 100% of the principal amount of the Notes, plus accrued but unpaid interest, if the price of a share of
our common stock has been at least 150% of the conversion price then in effect for specified periods.
In the case of certain events such as acquisition or liquidation of THQ, or delisting of our common stock from
a U.S. national securities exchange, holders may require us to repurchase all or a portion of the Notes for
cash at a purchase price of 100% of the principal amount of the Notes, plus accrued and unpaid interest.
At March 31, 2010, we had $82.9 million of short-term available-for-sale investments and $1.9 million of long-
term available-for-sale investments. We classified certain of these investments as long-term to reflect the lack
of liquidity of these securities. In addition, we had $21.0 million of short-term, pledged trading securities.
Our ability to maintain sufficient liquidity could be affected by various risks and uncertainties described in
“Part II—Item 1A. Risk Factors.” We may choose at any time to raise or borrow additional capital to
strengthen our cash position, facilitate expansion, pursue strategic investments or to take advantage of
business opportunities as they arise.
Contrac tual Obligations
Guarantees and Commitments
A summary of annual minimum contractual obligations and commercial commitments as of March 31, 2010 is
as follows (in thousands):
Contrac tual Obligations and Commercial Commitments(6)
Fiscal
Years
Ending
March 31,
License /
Software
Development
Commitments(1)
Ad vertising(2)
Leases(3)
Debt(4)
Other(5)
Total
2011....................................... $112,478 $5,798 $14,905 $13,249 $6,653 $153,083
2012....................................... 59,963 14,207 14,209 — 6,582 94,961
2013....................................... 16,600 2,676 11,217 — 4,000 34,493
2014....................................... 12,000 1,325 10,043 — 4,000 27,368
2015....................................... 10,000 577 8,850 100,000 — 119,427
Thereafter ............................. 22,500 1,000 11,560 — — 35,060
$233,541 $25,583 $70,784 $113,249 $21,235 $464,392
(1)
Licenses and Software Development. We enter into contractual arrangements with third parties
for the rights to exploit intellectual property and for the development of products. Under these