THQ 2011 Annual Report Download - page 46

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize
liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent
to which, additional taxes will be due. Our estimate for the potential outcome for any uncertain tax issue, including our claims for
research and development income tax credits, requires judgment. We believe we have adequately provided for any reasonably
foreseeable outcome related to these matters. However, our future results may include favorable or unfavorable adjustments to
our estimated tax liabilities in the period in which they are resolved or when statutes of limitation on potential assessments expire.
We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions meeting the "more likely than not" threshold, the amount
recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement with the relevant tax authority.
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In October 2009, the FASB issued ASU 2009-13, "Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements
—a consensus of the FASB Emerging Issues Task Force" ("ASU 2009-13"). ASU 2009-13 provides criteria for separating
consideration in non-software multiple-deliverable arrangements. It establishes a selling price hierarchy for determining the price
of a deliverable and expands the disclosures related to a vendor's multiple-deliverable revenue arrangements. ASU 2009-13 is
effective prospectively for arrangements entered into or materially modified in years beginning after June 15, 2010, which is our
fiscal 2012. Our adoption of ASU 2009-13 on April 3, 2011 did not materially impact our results of operations, financial position
or cash flows.
In October 2009, the FASB issued ASU 2009-14, “Software (Topic 985): Certain Revenue Arrangements That Include Software
Elements-a consensus of the FASB Emerging Issues Task Force” (“ASU 2009-14”). ASU 2009-14 amends the Accounting
Standards Codification to change the accounting model for revenue arrangements that include both tangible products and software
elements, such that tangible products containing both software and non-software components that function together to deliver the
tangible product's essential functionality are no longer within the scope of software revenue guidance. ASU 2009-14 is effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010,
which is our fiscal 2012. Our adoption of ASU 2009-14 on April 3, 2011 did not materially impact our results of operations,
financial position or cash flows.
In January 2010, the FASB issued ASU 2010-06, "Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures
about Fair Value Measurements" ("ASU 2010-06"). ASU 2010-06 amends ASC 820 and clarifies and provides additional disclosure
requirements related to recurring and non-recurring fair value measurements and employers' disclosures about postretirement
benefit plan assets. ASU 2010-06 disclosure requirements about purchases, sales, issuances, and settlements in the roll forward
activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years, and will be reflected in our Form 10-Q for the quarter ending June 30, 2011. The adoption will
not materially impact our disclosures.
In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs,” which results in common fair value measurement and disclosure requirements in U.S.
GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP
for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is effective for interim and
annual periods beginning after December 15, 2011, which will be our quarter ending March 31, 2012. The adoption is not expected
to have a material impact on our results of operations, financial position or cash flows.
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We are exposed to certain market risks arising from transactions in the normal course of business, principally risks associated with
interest rate and foreign currency fluctuations. Market risk is the potential loss arising from changes in market rates and market
prices. We employ established policies and practices to manage these risks. We use foreign exchange option and forward contracts
to hedge anticipated exposures or mitigate some existing exposures subject to foreign currency exchange rate risk as discussed
below. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
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At March 31, 2011, our $85.6 million of cash and cash equivalents were comprised of cash and time deposits and money market
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