THQ 2010 Annual Report Download - page 70

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Depreciation expense associated with property and equipment amounted to $12.8 million, $17.5 million and
$17.4 million for fiscal 2010, 2009 and 2008, respectively.
Accrued and Other Current Liabilities.
Accrued and other current liabilities at March 31, 2010 and 2009
consisted of the following (in thousands):
March 31,
2010
March 31,
2009
Accrued liabilities ....................................................................... $16,613 $25,425
Settlement payment due to Jakks .......................................... 6,000 —
Accrued compensation ............................................................. 34,696 27,058
Accrued venture partner expense .......................................... — 56,692
Deferred revenue, net............................................................... 6,403 17,289
Accrued third-party software developer milestones .............. 23,676 21,526
Accrued royalties ....................................................................... 49,944 42,150
Accrued and other current liabilities .................................... $137,332 $190,140
The current and long-term portions of the settlement payments due to Jakks reflects the present value of the
consideration payable under the agreement between THQ and Jakks, as explained further in “Note 17—
Settlement Agreements.”
Accrued venture partner expense consisted of the preferred payments owed to Jakks for WWE video games
sold under a license granted by World Wrestling Entertainment, Inc. for the period beginning July 1, 2006
and ending December 31, 2009. On August 17, 2009, we entered into a settlement agreement with Jakks
that established the preferred payment rate owed to Jakks at a rate 40% lower than the previous contract
rate. We had been accruing this expense at the contract payment rate that expired June 30, 2006, which,
prior to the settlement, was the best basis available upon which to estimate this expense. As a result of
establishing the preferred payment rate for the period under dispute, we revised our previous estimate, which
resulted in a one-time reduction in accrued venture partner expense of $24.2 million, with a corresponding
reduction in venture partner expense during the three months ended September 30, 2009. In addition,
during the three months ended September 30, 2009, we paid Jakks $33.5 million, which we had previously
not paid, pending the settlement of the preferred return rate matter (inclusive of a $32.8 million settlement
amount related to the period beginning July 1, 2006 and ending March 31, 2009). As further explained in
“Note 17—Settlement Agreements,” the LLC was terminated as of December 31, 2009; the final amounts
due Jakks were paid within fiscal 2010 and accordingly, the balance in accrued venture partner expense at
March 31, 2010 was zero.
Other Long-Term Liabilities. Other long-term liabilities at March 31, 2010 and 2009 consisted of the following
(in thousands):
March 31,
2010
March 31,
2009
Accrued royalties ....................................................................... $75,163 $19,986
Unrecognized tax benefits and related interest.................... 1,612 5,158
Deferred rent .............................................................................. 5,148 4,434
Accrued liabilities ....................................................................... 4,741 3,925
Settlement payment due to Jakks .......................................... 12,161 —
Other long-term liabilities....................................................... $98,825 $33,503