THQ 2011 Annual Report Download - page 79

operations.
Cash Flow Hedging Activities. From time to time, we hedge a portion of our foreign currency risk related to forecasted foreign
currency denominated sales and expense transactions by entering into foreign exchange forward contracts that generally have
maturities of less than 90 days. Our hedging programs reduce, but do not entirely eliminate, the impact of currency exchange rate
movements in net sales and operating expenses. During fiscal 2011, we did not enter into any foreign exchange forward contracts
related to cash flow hedging activities. During fiscal 2010, we entered into foreign exchange forward contracts related to cash
flow hedging activities in the notional amount of $29.2 million. These contracts were settled during the year ended March 31,
2010 and resulted in a loss of $0.7 million, which is included in "Interest and other income (expense), net" in our consolidated
statements of operations.
Balance Sheet Hedging Activities. The forward contracts related to balance sheet hedging activities generally have a contractual
term of one month or less and are transacted near month-end. Therefore, the fair value of the forward contracts generally is not
significant at each month-end.
At March 31, 2011 and March 31, 2010, we had foreign exchange forward contracts related to balance sheet hedging activities in
the notional amount of $100.6 million and $90.1 million, respectively, with a fair value that approximates zero at both March 31,
2011 and March 31, 2010. We estimated the fair value of these contracts using Level 1 inputs, specifically, inputs obtained in
quoted public markets. The net gain recognized from these contracts during fiscal 2011 was $6.9 million, and is included in
"Interest and other income (expense), net" in our consolidated statements of operations. The net gain recognized from these
contracts during fiscal 2010 was $4.8 million, and is included in "Interest and other income (expense), net" in our consolidated
statements of operations.
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THQ's stockholders hold their stock subject to a Section 382 Rights Agreement (the "Rights Agreement"), entered into by and
between the Company and Computershare Trust Company, N.A., as rights agent, on May 12, 2010. Pursuant to the Rights
Agreement, each share of THQ common stock is accompanied by a right for the holder of such share to purchase one one-thousandth
of a share of Series A Junior Participating Preferred Stock of the Company, par value $.01 (the "Preferred Stock"), at a purchase
price of $35.00. If issued, each such fractional share of Preferred Stock would give the stockholder approximately the same
dividend, voting and liquidation rights as does one share of the Company's common stock. However, prior to exercise, a right
does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation
rights. The rights will not be exercisable until the earlier of (i) ten business days after a public announcement that a person has
become an "Acquiring Person" by acquiring beneficial ownership of 4.9% or more of the Company's outstanding common stock
(or, in the case of a person that had beneficial ownership of 4.9% or more of the Company's outstanding common stock as of the
close of business on May 12, 2010, by obtaining beneficial ownership of additional shares of the Company's common stock
representing three-tenths of one percent (0.3%) of the common stock then outstanding) and (ii) ten business days (or such later
date as may be specified by the Company's board prior to such time as any person becomes an Acquiring Person) after the
commencement of a tender or exchange offer by or on behalf of a person that, if completed, would result in such person becoming
an Acquiring Person.
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A summary of annual minimum contractual obligations and commercial commitments as of March 31, 2011 is as follows (amounts
in thousands):
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2012
2013
2014
2015
2016
Thereafter
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/LFHQVH
6RIWZDUH
'HYHORSPHQW
&RPPLWPHQWV
$ 104,383
23,448
16,500
19,833
11,500
20,000
$ 195,664
$GYHUWLVLQJ
$ 19,912
14,199
19,533
2,181
500
500
$ 56,825
/HDVHV
$ 16,555
12,737
11,376
10,041
5,374
11,078
$ 67,161
'HEW
$—
—
—
100,000
—
—
$ 100,000
2WKHU
$ 6,582
4,000
4,000
—
—
—
$ 14,582
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$ 147,432
54,384
51,409
132,055
17,374
31,578
$ 434,232
70