THQ 2010 Annual Report Download - page 56

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Fiscal Year. We report our fiscal year on a 52/53-week period with our fiscal year ending on the Saturday
nearest March 31. The results of operations for the fiscal years ended March 31, 2010, 2009 and 2008
contain the following number of weeks:
Fiscal Period
Number of
Weeks
Fiscal Period End
Date
Year ended March 31, 2010 (“fiscal 2010”). 53 weeks April 3, 2010
Year ended March 31, 2009 (“fiscal 2009”). 52 weeks March 28, 2009
Year ended March 31, 2008 (“fiscal 2008”). 52 weeks March 29, 2008
For simplicity, all fiscal periods in our consolidated financial statements and accompanying notes are
presented as ending on a calendar month end.
Pervasiveness of Estimates. The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of net sales and expenses
during the reporting period. Actual results could differ from those estimates. The most significant estimates
relate to accounts receivable allowances, licenses, software development, revenue recognition, stock-based
compensation expense and income taxes.
Foreign Currency Translation. Assets and liabilities of foreign operations are translated at current rates of
exchange while results of operations are translated at average rates in effect for the period. Translation
gains or losses are shown as a separate component of accumulated other comprehensive income (loss).
Foreign currency transaction gains and losses result from exchange rate changes for transactions
denominated in currencies other than the functional currency and are included in interest and other income
(expense), net in our consolidated statements of operations. For fiscal 2010, foreign currency transaction
losses were $1.1 million, compared to gains of $0.8 million and $0.5 million in fiscal 2009 and 2008,
respectively.
Cash, Cash Equivalents and Investment Securities. We consider all money market funds and highly liquid
investments with maturities of three months or less when purchased to be cash equivalents.
Investments designated as trading securities are bought and held principally for the purpose of selling them
in the near term and are reported at fair value, with unrealized gains and losses recognized in earnings.
Investments designated as available-for-sale securities are carried at fair value based on quoted market
prices or estimated based on quoted market prices for financial instruments with similar characteristics.
Unrealized gains and losses of the Company’s available-for-sale securities are excluded from earnings and
reported as a component of accumulated other comprehensive income (loss). Additionally, the Company
assesses whether an other-than-temporary impairment loss on its available-for-sale securities has occurred
due to declines in fair value or other market conditions. Declines in fair value that are considered other-than-
temporary are recorded as interest and other income (expense), net, in the consolidated statements of
operations.
In general, investments with original maturities of greater than three months and remaining maturities of less
than one year when purchased are classified as short-term investments. Investments with maturities beyond
one year may also be classified as short-term based on their highly liquid nature and because such
investments represent the investment of cash that is available for current operations.
The Company’s investments include auction rate securities (“ARS”). These ARS are variable rate bonds tied
to short-term interest rates with long-term maturities. ARS have interest rate resets through a modified Dutch
auction at predetermined short-term intervals, typically every 7, 28, or 35 days. Interest on ARS is generally
paid at the end of each auction process or semi-annually and is based upon the interest rate determined
during the prior auction. The majority of our ARS are AAA/Aaa rated, and are typically collateralized by
student loans guaranteed by the U.S. government under the Federal Family Education Loan Program or
backed by monoline bond insurance companies. See “Note 3—Investment Securities” for further details.
Financial Instruments. The carrying value of certain financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, accrued expenses, accrued royalties, and secured
credit lines approximate fair value based on their short-term nature. Investments classified as
available-for-sale and trading are stated at fair value.