THQ 2011 Annual Report Download - page 65

in our consolidated balance sheet. Additionally, as of March 31, 2011 we had commitments of $63.1 million that are not reflected
in our consolidated financial statements due to remaining performance obligations of the developer.
Impairment analysis. Data published in early calendar 2011 indicated a significant industry slowdown in console titles aimed at
children (particularly kids movie-based titles). This change in consumer preferences, combined with our lower than anticipated
sales on similar titles in this holiday season, caused us to significantly lower our current expectations of future sales related to
several of our unreleased kids movie-based licensed titles and resulted in license impairment charges of $30.3 million in fiscal
2011. A hypothetical 10% adverse change in the net sales inputs used to determine the impairments on these titles would have
resulted in an increase to the impairment charges recorded by $3.0 million. In fiscal 2011 and 2010, license impairment charges
totaled $36.2 million and $5.4 million, respectively. Additionally in fiscal 2011 we recorded charges of $0.4 million related to
game cancellations under our realignment plans as further discussed in "Note 10 — Restructuring and Other Charges." These
charges are recorded in “Cost of sales — License amortization and royalties" expense in our consolidated statements of operations.
In fiscal 2011 we recorded software development impairment charges of $7.0 million. Additionally, in fiscal 2011 and fiscal 2010,
we recorded charges of $9.9 million and $7.9 million, respectively, related to game cancellations under our realignment plans as
further discussed in "Note 10 — Restructuring and Other Charges." These charges are recorded in “Cost of sales — Software
amortization and royalties" expense in our consolidated statements of operations.
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Intangible assets include licenses, software development and other intangible assets. Intangible assets are included in "Other long-
term assets, net," except licenses and software development, which are reported separately in our consolidated balance sheets.
Other than licenses and software development, we did not have any other net intangible asset balances at March 31, 2011 and
2010. Finite-lived other intangible assets were amortized using the straight-line method over the lesser of their estimated useful
lives or the agreement terms, typically from one and one-half to ten years and were assessed for impairment whenever events or
changes in circumstances indicated that their carrying amount may not have been recoverable. Amortization of other intangible
assets for fiscal 2011, 2010 and 2009 was zero, $0.8 million and $1.8 million, respectively. Additionally, in fiscal 2010 we
recognized $2.9 million of restructuring charges related to the write-off of intangible assets related to our fiscal 2009 realignment
plan.
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Other long-term assets includes our investment in Yuke's, a Japanese video game developer. We own approximately 15% of Yuke's,
which is publicly traded on the Nippon New Market in Japan. This investment is classified as available-for-sale and reported at
fair value with unrealized holding gains and losses excluded from earnings and reported as a component of other comprehensive
income until realized. In fiscal 2011 the pre-tax unrealized holding loss related to our investment in Yuke's was $0.9 million, and
in fiscal 2010 the pre-tax unrealized holding gain was $1.7 million. As of March 31, 2011, the inception-to-date net unrealized
holding gain on our investment in Yuke's was $1.5 million. Due to the long-term nature of this relationship, this investment is
included in "Other long-term assets, net" in our consolidated balance sheets.
Other long-term assets as of March 31, 2011 and 2010 consisted of the following (amounts in thousands):
Investment in Yuke's
Deferred financing costs
Other
Total other long-term assets
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$ 4,686
2,146
3,182
$ 10,014
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$ 5,564
2,781
2,255
$ 10,600
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