THQ 2011 Annual Report Download - page 35

compared to fiscal 2010. The decrease was primarily due to lower personnel related costs and lower legal costs due to litigation
that was settled in fiscal 2010.
Restructuring
Restructuring charges include any of the costs associated with lease abandonments (less estimates of sublease income), write-offs
of related long-lived assets due to studio closures, as well as costs of other non-cancellable contracts. In fiscal 2011, restructuring
charges and adjustments were minimal and primarily reflected facility related charges and adjustments due to changes in actual
and estimated sublease income related to our fiscal 2009 realignment. For further information related to our restructuring plans
and charges and the events and decisions that gave rise to such charges, see “Note 10 — Restructuring and Other Charges” in the
notes to the consolidated financial statements included in Item 8.
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Interest and other income (expense), net consists of interest earned on our investments, gains and losses resulting from exchange
rate changes for transactions denominated in currencies other than the functional currency, and interest expense, net of capitalization
and amortization of debt issuance costs on our $100.0 million 5% convertible senior notes ("Notes"). For further discussion of
the Notes, see "Note 12 — Convertible Senior Notes" in the notes to the consolidated financial statements included in Item 8.
Interest and other income (expense), net for fiscal 2011 was income of $0.5 million and primarily represented foreign currency
gains and interest income, as substantially all interest expense for the year was capitalized to software development. Interest and
other income (expense), net for fiscal 2010 was an expense of $2.1 million, which primarily represented $3.8 million in interest
expense which was not capitalized, and foreign currency losses, offset by interest income. (See "Note 25 — Quarterly Financial
Data (Unaudited)" in the notes to the consolidated financial statements included in Item 8 for further discussion of our capitalization
of interest expense on our Notes.)
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Income tax expense for fiscal 2011 was $0.9 million, which primarily represents foreign taxes and U.S. state taxes offset by a
$1.6 million benefit related to the release of a valuation allowance on previously unrecognized tax benefits, compared to income
tax expense of $0.2 million in fiscal 2010. The change in income taxes is primarily attributable to income taxes incurred in foreign
jurisdictions, which are not reduced by losses in the United States. The effective tax rate differs significantly from the federal
statutory rate primarily due to losses in the United States that are fully offset by a valuation allowance to the extent that such losses
are not subject to loss carry-back provisions.
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We sold our interest in THQ*ICE LLC (a joint venture with ICE Entertainment, Inc.) on April 30, 2010 and recognized an
insignificant gain. In fiscal 2010, we recognized $2.9 million of noncontrolling interest reflecting the loss allocable to equity
interests in THQ*ICE LLC that were not owned by THQ.
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Fiscal 2010 net sales were primarily driven by sales of our first game based on the UFC franchise, UFC 2009 Undisputed, as well
as WWE SmackDown vs. Raw 2010 and catalog titles. Net sales increased $69.1 million in fiscal 2010 to $899.1 million, from
$830.0 million in fiscal 2009.
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