THQ 2011 Annual Report Download - page 62

The following table summarizes the amortized cost and fair value of our available-for-sale investment securities, classified by
stated maturity as of as of March 31, 2011 and 2010 (amounts in thousands):
Short-term investments:
Due in one year or less
Due after one year through five years
7RWDOVKRUWWHUPLQYHVWPHQWV
Long-term investments:
Due after one year through five years
Due after ten years
7RWDOORQJWHUPLQYHVWPHQWV
7RWDODYDLODEOHIRUVDOHLQYHVWPHQWVHFXULWLHV
0DUFK
)DLU
9DOXH
$—
—
²
—
—
²
²
0DUFK
$PRUWL]HG
&RVW
$ 31,834
50,955

500
1,500

 
)DLU
9DOXH
$ 31,888
51,053

490
1,361

 
Auction Rate Securities
At March 31, 2010, we had $1.9 million of available-for-sale ARS classified as "Long-term investments," and $21.0 million of
trading ARS classified as "Short-term investments, pledged" in our consolidated balance sheets. 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 our consolidated balance sheets.
In October 2008, we entered into a settlement agreement with UBS Financial Services Inc. ("UBS"), the broker of certain of our
ARS (the "UBS Agreement"). The UBS Agreement provided 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 and in
return, we agreed to release UBS from certain potential claims related to the ARS in certain specified circumstances. These Rights
were a freestanding instrument accounted for separately from the ARS, and were registered, nontransferable securities accounted
for as a put option. At March 31, 2010, the put option had a fair value of $1.7 million and is recorded in "Short-term investments,
pledged" in our consolidated balance sheets along with the underlying ARS which had a fair value of $21.0 million.
On June 30, 2010, we exercised our Rights and sold all of the remaining ARS underlying the UBS Agreement to UBS at par value
in accordance with the terms of the UBS Agreement. Accordingly, in the three months ended June 30, 2010, we recognized a loss
of $1.7 million due to the exercise of the put option, which is recorded in "Interest and other income (expense), net" in our
consolidated statements of operations. This loss was offset by a gain of $1.7 million on the settlement of the underlying ARS.
Additionally, pursuant to the UBS Agreement, we entered into a Credit Agreement with UBS Bank USA, which allowed us to
borrow up to 75% of the market value of the ARS (as determined by UBS) at any time, on a no net interest basis, to the extent
that such ARS continued to be illiquid or until June 30, 2010 (see "Note 11 — Secured Credit Line"). In the three months ended
June 30, 2010, we repaid the entire amount outstanding under the credit line, which was $13.2 million. The credit line established
pursuant to the Credit Agreement was secured by certain of our ARS held with UBS. At June 30, 2010 we had no borrowings
outstanding under the Credit Agreement and the credit line was terminated, pursuant to its terms, on July 2, 2010.
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