THQ 2010 Annual Report Download - page 65

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The following table summarizes the amortized cost and fair value of our available-for-sale investment
securities, classified by stated maturity, at March 31, 2010 (in thousands):
Amortized
Cost
Fair
Value
Short-term investments:
Due in one year or less ............................................................... $31,834 $31,888
Due after one year through five years ....................................... 50,955 51,053
Tota l sh ort-te rm investments
............................................ 8
82, 78 9
82,9 41
Long-term investments:
Due after one year through five years ....................................... 500 490
Due after ten years ..................................................................... 1,500 1,361
Tota l l ong -term i nvestments
............................................. 2
2,000
1, 85 1
Tota l avai la ble -f or -s ale i nv estment secu rit ies
................... $
$84,789
$84,792
The following table summarizes the amortized cost and fair value of our investment securities, classified by
stated maturity as of March 31, 2009 (in thousands):
Amortized
Cost
Fair
Value
Short-term investments:
Due in one year or less ............................................................... $8,802 $8,804
Tota l sh ort-te rm investments
............................................ 8
8,802
8, 80 4
Long-term investments:
Due after one year through five years ....................................... 500 490
Due after ten years ..................................................................... 4,975 4,535
Tota l l ong -term i nvestments
............................................. 5
5,475
5, 02 5
Tota l i nvestme nt secu riti es
...................................................... $
$14,277
$13,829
Auction Rate Securities
At March 31, 2010, we had $1.9 million of ARS classified as long-term available-for-sale investments, and
$21.0 million of ARS classified as short-term trading investments, pledged. 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. In addition, as further discussed below, we held a $1.7 million put
option related to the short-term trading ARS that is also classified as short-term investments, pledged.
In October 2008, we entered into a settlement agreement with UBS, the broker of certain of our ARS (the
“UBS Agreement”). The UBS Agreement provides us with Auction Rate Securities Rights (“Rights”) to sell
such ARS to UBS at the par value of the underlying securities at any time during the period from June 30,
2010 through July 2, 2012. These Rights are a freestanding instrument accounted for separately from the
ARS, and are registered, nontransferable securities accounted for as a put option. Under the UBS
Agreement, UBS may, at its discretion, sell the ARS at any time through July 2, 2012 without prior notice,
and must pay us par value for the ARS within one day of the settlement. The put option had a fair value of
$1.7 million and is recorded in short-term investments, pledged in our March 31, 2010 consolidated balance
sheet along with the underlying ARS which have a fair value of $21.0 million.
In fiscal 2010, the put option had a decline in value of $2.8 million which is recorded as a loss in interest and
other income (expense), net in the consolidated statement of operations. Of this $2.8 million loss, $1.1 million
relates to ARS which were settled in fiscal 2010, and is offset by a gain of $1.1 million on the settlement of
the underlying ARS. The remaining loss on the put option of $1.7 million relates to trading securities still held
by us at March 31, 2010, for which there is an offsetting gain of $1.9 million related to changes in their fair
value. In aggregate, the gains from trading securities net almost entirely against the loss recognized on the
put option.
In fiscal 2009, $0.2 million of net mark-to-market losses have been recorded in interest and other income
(expense), net, in the accompanying consolidated statement of operations, related to trading securities still
held at March 31, 2009. Included in the $0.2 million of net mark-to-market losses were gross losses of
$5.5 million related to transfers of securities from the available-for-sale category into the trading category.