-- Improved Operating Results Driven by Focused Product Strategy
and Cost Cutting Measures --
AGOURA HILLS, Calif.--(BUSINESS WIRE)--Nov. 4, 2009--
THQ Inc. (NASDAQ: THQI) today announced financial results for the three
months ended September 30, 2009.
For the fiscal second quarter ended September 30, 2009, THQ reported net
sales of $101.3 million, compared with $164.8 million in the prior-year
period. On a non-GAAP basis, for the three months ended September 30,
2009, the company reported net sales of $100.4 million, compared with
$151.6 million a year ago. The company had no major product
releases in the fiscal 2010 second quarter, and as a result, net sales
were driven primarily by continued sales of previously released
games.
For the three months ended September 30, 2009, the company reported a
net loss of $5.6 million, or $0.08 per share, compared with a net loss
of $115.3 million, or $1.73 per share, in the prior-year period. On a
non-GAAP basis, for the three months ended September 30, 2009, the
company reported a net loss of $25.2 million, or $0.37 per share,
compared with a net loss of $30.4 million, or $0.46 per share, in the
same quarter a year ago.
A reconciliation of non-GAAP to GAAP results is provided in the
accompanying financial tables.
“THQ is now operating as a more focused, more efficient company,” said
Brian Farrell, THQ’s president and CEO. “We continue to deliver highly
rated hit titles such as UFC 2009 Undisputed and WWE SmackDown vs. Raw
2010. We believe we are well positioned this holiday with our strong
mass-market line-up led by the highly rated WWE SmackDown vs. Raw 2010,
and the latest version of our multi-million unit franchise MX vs. ATV
Reflex. In addition, we have positioned THQ to take a leading role in
emerging online platforms in Asia and the US."
In July 2009, THQ prevailed in arbitration and in August 2009, THQ
reached a settlement with JAKKS Pacific, which established a 40% lower
preferred return payment rate owed to JAKKS Pacific for video games sold
under the WWE license from July 1, 2006 through December 31, 2009.
Pursuant to the terms of the settlement agreement, the company paid
$32.8 million of accrued venture partner expense to JAKKS Pacific for
the period of July 1, 2006 through March 31, 2009. Also related to the
settlement, the company reported a one-time benefit of $24.2 million in
its GAAP financial results for the fiscal 2010 second quarter ending
September 30, 2009.
Fiscal 2010 Second Quarter Highlights and Recent Developments
-
THQ gained market share for the first nine months of calendar 2009,
ranking as the #3 independent publisher in the US1 with a
5.4% share and the #4 independent publisher in Europe2 with
a 4.5% share
-
UFC® 2009 Undisputed™ is a top-five best selling Xbox 360®
and PlayStation®3 game for the first nine months of calendar 2009,
according to NPD
-
THQ strengthened its balance sheet with the issuance of $100 million
of 5.00% convertible senior notes maturing in August 2014
-
THQ advanced its online games strategy with the:
-
launch of Dragonica™ Online in North America;
-
launch of the public beta version of Company of Heroes® Online
in China with Shanda Games; and
-
new partnership with Windysoft to bring Company of Heroes Online
to South Korea
-
THQ appointed Edward L. Kaufman as Executive Vice President of
Business and Legal Affairs, and Corporate Secretary
1Source: The NPD Group
|
2Source: Chart-Track and GfK
|
Business Outlook
Fiscal Year Ending March 31, 2010
The company reaffirmed its expectation to report fiscal 2010 net sales
higher than those reported in fiscal 2009, and to achieve profitability
for fiscal 2010, on a non-GAAP basis. The full year non-GAAP outlook
excludes the one-time benefit of $24.2 million from the JAKKS settlement.
The company reaffirmed its expectation that its fiscal 2010 year-end
cash balance will be at least $50 million higher than at the end of
fiscal 2009, excluding the $32.8 million settlement payment to JAKKS
Pacific and the net proceeds from the $100 million convertible senior
note offering.
Fiscal 2010 Second Half Net Sales
The company expects to report fiscal 2010 second half net sales similar
to last year’s second half, with fiscal 2010 third quarter net sales
that are approximately 5-10% below the same period last year, and a
stronger fiscal 2010 fourth quarter than the prior-year quarter.
Pursuant to THQ’s product strategy, key releases scheduled for the third
and fourth quarters of fiscal 2010 include:
Fiscal Third Quarter
|
|
|
|
|
Core Games
|
|
|
|
Platforms
|
WWE® SmackDown® vs. Raw® 2010
|
|
|
|
Xbox 360, PlayStation 3, Wii™, Nintendo DS™,
|
|
|
|
|
PlayStation®2, PSP®
|
MX vs. ATV™ Reflex
|
|
|
|
Xbox 360, PlayStation 3, Nintendo DS, PSP
|
|
Kids, Family and Casual Games
|
|
|
|
|
All Star Cheer Squad™ 2
|
|
|
|
Wii
|
Disney●Pixar’s Cars Race-O-Rama
|
|
|
|
Xbox 360, PlayStation 3, Wii, Nintendo DS, PlayStation 2, PSP
|
Drawn to Life®: The Next Chapter™
|
|
|
|
Wii, Nintendo DS
|
Marvel® Super Hero Squad™
|
|
|
|
Wii, Nintendo DS, PlayStation 2, PSP
|
SpongeBob Truth or Square
|
|
|
|
Xbox 360, Wii, Nintendo DS, PSP
|
The Biggest Loser
|
|
|
|
Wii, Nintendo DS
|
World of Zoo™
|
|
|
|
Wii, Nintendo DS, Windows PC
|
|
Online
|
|
|
|
|
Company of Heroes Online
|
|
|
|
Online
|
Dragonica Online
|
|
|
|
Online
|
|
Fiscal Fourth Quarter
|
|
|
|
|
Core Games
|
|
|
|
Platforms
|
Darksiders™
|
|
|
|
Xbox 360, PlayStation 3
|
Metro 2033™
|
|
|
|
Xbox 360, Windows PC
|
Warhammer® 40,000™: Dawn of War™ II –
|
|
|
|
Windows PC
|
Chaos Rising™
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
In addition to results determined in accordance with GAAP, the company
discloses certain non-GAAP financial measures that exclude the following:
-
stock-based compensation expense,
-
the impact of deferred revenue and related costs,
-
business realignment expense,
-
other-than-temporary impairment on investments and any subsequent
realized gains on those investments, and mark-to-market adjustments on
trading Auction Rate Securities,
-
other material non-recurring charges and benefits, and
-
related income tax effects for each of these items.
Beginning in fiscal 2010, for non-GAAP purposes, the company has adopted
a fixed, long-term projected tax rate of 15% to evaluate its operating
performance, as well as to forecast, plan and analyze future periods.
THQ may consider whether other significant non-recurring items that
arise in the future should also be excluded in calculating the non-GAAP
financial measures it uses.
The company excludes these expenses from its non-GAAP financial measures
primarily because its management does not believe they reflect the
company’s core business, ongoing operating results or future outlook.
THQ’s management believes that the use of non-GAAP financial measures
provides meaningful supplemental information regarding its financial
condition and results of operations, and helps investors compare actual
results to its long-term operating goals as well as to its performance
in prior periods. The non-GAAP financial measures included in the
earnings release have been reconciled to the comparable GAAP results in
the accompanying tables, and should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, GAAP results.
In addition to the reasons stated above, which are generally applicable
to each of the items THQ excludes from its non-GAAP financial measures,
the company’s management uses certain of the non-GAAP financial measures
for the following reasons:
Stock-Based Compensation. THQ does not consider stock-based
compensation charges when evaluating the performance of its business or
formulating its operating plans. Stock-based compensation charges are
subject to significant fluctuation outside the control of management due
to the variables used to estimate the fair value of a share-based
payment, such as THQ’s stock price, interest rates and the volatility of
the company’s stock price. Further, when considering the impact of
equity award grants, THQ places a greater emphasis on the use of such
grants as retention tools for long-term stockholder value creation, as
well as overall stockholder dilution, rather than the accounting charges
associated with such grants.
Deferred Revenue/Costs. Beginning in fiscal 2008, the company
began recognizing the revenue and related costs from the sale of certain
titles for which the online service is determined to be a deliverable
over the estimated online service period. Although the company defers
the recognition of its net revenue and costs with respect to these
titles, there is no adverse impact to its operating cash flow.
Internally, THQ’s management excludes the impact of deferred net revenue
and costs related to packaged games when evaluating the company’s
operating performance, when planning, forecasting and analyzing future
periods, and when assessing the performance of its management team. The
company believes that excluding the impact of deferred net revenue and
related costs from its non-GAAP financial measures is important to
facilitate comparisons to prior periods when the company did not defer
the recognition of such amounts.
Business Realignment Expense. Although THQ has incurred business
realignment expenses in the past, each charge has been a discrete,
extraordinary event based on a unique set of business objectives. The
company does not engage in business realignments on a regular basis or
in the ordinary course of business. As such, the company believes it is
appropriate to exclude these expenses from its non-GAAP financial
measures.
Investor Conference Call
THQ will host a conference call to discuss fiscal 2010 second quarter
results today at 2:00 p.m. Pacific/5:00 p.m. Eastern. Please dial
877.356.8075 domestic or 706.902.0203 international, conference ID
36220855 to listen to the call or visit the THQ Inc. Investor Relations
Home page at http://investor.thq.com.
The online archive of the broadcast will be available approximately two
hours after the live call ends. In addition, a telephonic replay of the
conference call will be provided approximately two hours after the live
call ends through November 6, 2009, by dialing 800.642.1687, domestic,
or 706.645.9291, international, conference ID 36220855.
About THQ
THQ Inc. (NASDAQ: THQI) is a leading worldwide developer and publisher
of interactive entertainment software. Headquartered in Los Angeles
County, California, THQ sells product through its global network of
offices located throughout North America, Europe and Asia Pacific. More
information about THQ and its products may be found at www.thq.com
and www.thqwireless.com.
THQ, All Star Cheer Squad 2, Company of Heroes, Darksiders, Drawn to
Life: The Next Chapter, MX vs. ATV Reflex, World of Zoo and their
respective logos are trademarks and/or registered trademarks of THQ Inc.
Microsoft, Xbox, Xbox 360, Xbox Live, the Xbox logos, and the Xbox Live
logo are either registered trademarks or trademarks of Microsoft
Corporation in the U.S. and/or other countries.
“PlayStation”, “PS” Family logo and “PSP” are registered trademarks of
Sony Computer Entertainment Inc.
Wii and Nintendo DS are trademarks of Nintendo.
All other trademarks are property of their respective owners.
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements include, but are not limited to, the
company’s expectations for the fiscal third quarter ending December 31,
2009, and the fiscal fourth quarter and year ending March 31, 2010, and
for the company’s product releases in future periods. These
forward-looking statements are based on current expectations, estimates
and projections about the business of THQ Inc. and its subsidiaries
(collectively referred to as “THQ”) and are based upon management’s
beliefs and certain assumptions made by management. Such
forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed or
implied by such forward-looking statements, including, but not limited
to, economic, competitive and technological factors affecting the
operations, markets, products, services and pricing of THQ, and our
ability to successfully implement our cost reduction plans. Unless
otherwise required by law, THQ disclaims any obligation to update its
view on any such risks or uncertainties or to revise or publicly release
the results of any revision to these forward-looking statements. Readers
should carefully review the risk factors and the information that could
materially affect THQ’s financial results, described in other documents
that THQ files from time to time with the Securities and Exchange
Commission, including its Quarterly Reports on Form 10-Q and its Annual
Report on Form 10-K for the fiscal period ended March 31, 2009, and
particularly the discussion of risk factors that may affect results of
operations set forth therein. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of the date of this press release.
THQ Inc. and Subsidiaries
|
Unaudited Consolidated Statements of Operations
|
(in thousands, except per share data)
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
2009
|
|
2008
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
101,290
|
|
$
|
164,816
|
|
|
|
$
|
344,791
|
|
$
|
302,394
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
38,975
|
|
|
76,038
|
|
|
|
|
118,904
|
|
|
136,046
|
|
Software amortization and royalties
|
|
24,191
|
|
|
39,512
|
|
|
|
|
69,227
|
|
|
66,512
|
|
License amortization and royalties
|
|
14,619
|
|
|
20,007
|
|
|
|
|
45,915
|
|
|
32,931
|
|
Venture partner expense
|
|
(23,668
|
)
|
|
899
|
|
|
|
|
(22,425
|
)
|
|
2,354
|
|
Total cost of sales
|
|
54,117
|
|
|
136,456
|
|
|
|
|
211,621
|
|
|
237,843
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
47,173
|
|
|
28,360
|
|
|
|
|
133,170
|
|
|
64,551
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Product development
|
|
19,304
|
|
|
23,231
|
|
|
|
|
41,462
|
|
|
56,780
|
|
Selling and marketing
|
|
19,028
|
|
|
43,124
|
|
|
|
|
57,471
|
|
|
72,175
|
|
General and administrative
|
|
14,055
|
|
|
16,971
|
|
|
|
|
30,633
|
|
|
36,574
|
|
Restructuring
|
|
870
|
|
|
—
|
|
|
|
|
2,522
|
|
|
—
|
|
Total operating expenses
|
|
53,257
|
|
|
83,326
|
|
|
|
|
132,088
|
|
|
165,529
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
(6,084
|
)
|
|
(54,966
|
)
|
|
|
|
1,082
|
|
|
(100,978
|
)
|
Interest and other income, net
|
|
290
|
|
|
(2,438
|
)
|
|
|
|
349
|
|
|
56
|
|
Income (loss) from continuing operations before income taxes
|
|
(5,794
|
)
|
|
(57,404
|
)
|
|
|
|
1,431
|
|
|
(100,922
|
)
|
Income taxes
|
|
154
|
|
|
57,892
|
|
|
|
|
1,154
|
|
|
43,640
|
|
Income (loss) from continuing operations
|
|
(5,948
|
)
|
|
(115,296
|
)
|
|
|
|
277
|
|
|
(144,562
|
)
|
Gain on sale of discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
2,042
|
|
Net income (loss) prior to allocation of noncontrolling interest
|
|
(5,948
|
)
|
|
(115,296
|
)
|
|
|
|
277
|
|
|
(142,520
|
)
|
Loss attributable to noncontrolling interest
|
|
378
|
|
|
36
|
|
|
|
|
562
|
|
|
36
|
|
Net income (loss) attributable to THQ Inc.
|
$
|
(5,570
|
)
|
$
|
(115,260
|
)
|
|
|
$
|
839
|
|
$
|
(142,484
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to THQ Inc. – basic:
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (1)
|
$
|
(0.08
|
)
|
$
|
(1.73
|
)
|
|
|
$
|
0.01
|
|
$
|
(2.17
|
)
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
0.03
|
|
Earnings (loss) per share – basic
|
$
|
(0.08
|
)
|
$
|
(1.73
|
)
|
|
|
$
|
0.01
|
|
$
|
(2.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to THQ Inc. – diluted:
|
|
|
|
|
|
|
|
|
|
|
Continuing operations (1)
|
$
|
(0.08
|
)
|
$
|
(1.73
|
)
|
|
|
$
|
0.01
|
|
$
|
(2.17
|
)
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
0.03
|
|
Earnings (loss) per share – diluted
|
$
|
(0.08
|
)
|
$
|
(1.73
|
)
|
|
|
$
|
0.01
|
|
$
|
(2.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation – basic
|
|
67,462
|
|
|
66,757
|
|
|
|
|
67,466
|
|
|
66,655
|
|
Shares used in per share calculation – diluted
|
|
67,462
|
|
|
66,757
|
|
|
|
|
67,745
|
|
|
66,655
|
|
|
(1) Based on amounts attributable to THQ Inc. (i.e.,
subsequent to the allocation of noncontrolling interest).
|
|
THQ Inc. and Subsidiaries
|
Reconciliation of GAAP Net income (loss) to Non-GAAP Net income
(loss) (a)
|
(in thousands, except per share data)
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Six Months Ended September 30,
|
|
|
|
2009
|
|
2008
|
|
|
|
2009
|
|
2008
|
|
Net sales
|
|
$
|
101,290
|
|
$
|
164,816
|
|
|
|
$
|
344,791
|
|
$
|
302,394
|
|
Changes in deferred net revenue
|
|
|
(909
|
)
|
|
(13,192
|
)
|
|
|
|
(10,511
|
)
|
|
(29,696
|
)
|
Non-GAAP net sales
|
|
$
|
100,381
|
|
$
|
151,624
|
|
|
|
$
|
334,280
|
|
$
|
272,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Six Months Ended September 30,
|
|
|
|
2009
|
|
2008
|
|
|
|
2009
|
|
2008
|
|
Operating income (loss)
|
|
$
|
(6,084
|
)
|
$
|
(54,966
|
)
|
|
|
$
|
1,082
|
|
$
|
(100,978
|
)
|
Non-GAAP adjustments affecting operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
JAKKS preferred return rate reduction (b)
|
|
|
(24,221
|
)
|
|
—
|
|
|
|
|
(24,221
|
)
|
|
—
|
|
Changes in deferred net revenue
|
|
|
(909
|
)
|
|
(13,192
|
)
|
|
|
|
(10,511
|
)
|
|
(29,696
|
)
|
Change in deferred cost of sales (c)
|
|
|
102
|
|
|
9,433
|
|
|
|
|
5,281
|
|
|
20,030
|
|
Business realignment expenses (c)
|
|
|
352
|
|
|
669
|
|
|
|
|
2,828
|
|
|
4,196
|
|
Stock-based compensation and related costs (c)
|
|
|
768
|
|
|
4,534
|
|
|
|
|
3,702
|
|
|
8,856
|
|
Total non-GAAP adjustments affecting operating income (loss)
|
|
|
(23,908
|
)
|
|
1,444
|
|
|
|
|
(22,921
|
)
|
|
3,386
|
|
Non-GAAP operating loss
|
|
$
|
(29,992
|
)
|
$
|
(53,522
|
)
|
|
|
$
|
(21,839
|
)
|
$
|
(97,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Six Months Ended September 30,
|
|
|
|
2009
|
|
2008
|
|
|
|
2009
|
|
2008
|
|
Net income (loss) attributable to THQ Inc.
|
|
$
|
(5,570
|
)
|
$
|
(115,260
|
)
|
|
|
$
|
839
|
|
$
|
(142,484
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments affecting operating income (loss)
|
|
|
(23,908
|
)
|
|
1,444
|
|
|
|
|
(22,921
|
)
|
|
3,386
|
|
Gain on sale of investments (d)
|
|
|
(152
|
)
|
|
—
|
|
|
|
|
(640
|
)
|
|
—
|
|
Other-than-temporary impairment on investments
|
|
|
—
|
|
|
4,561
|
|
|
|
|
—
|
|
|
4,561
|
|
Mark-to-market on trading Auction Rate Securities (e)
|
|
|
(234
|
)
|
|
—
|
|
|
|
|
(95
|
)
|
|
—
|
|
Interest and other income, net
|
|
|
(63
|
)
|
|
—
|
|
|
|
|
(63
|
)
|
|
—
|
|
Deferred tax asset valuation allowance and related tax
|
|
|
—
|
|
|
80,520
|
|
|
|
|
—
|
|
|
80,520
|
|
Income tax adjustments (f)
|
|
|
4,678
|
|
|
(1,705
|
)
|
|
|
|
4,498
|
|
|
(1,823
|
)
|
Non-GAAP net loss
|
|
$
|
(25,249
|
)
|
$
|
(30,440
|
)
|
|
|
$
|
(18,382
|
)
|
$
|
(55,840
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per share – diluted
|
|
$
|
(0.37
|
)
|
$
|
(0.46
|
)
|
|
|
$
|
(0.27
|
)
|
$
|
(0.84
|
)
|
Notes:
(a) See explanation above regarding the Company’s practice on
reporting non-GAAP financial measures.
|
(b) Represents the one-time reduction in accrued joint venture
partner expense resulting from the settlement of the preferred
return rate with JAKKS Pacific.
|
(c) See table below for further detail related to income statement
classification of these adjustments.
|
(d) Realized gains on sales of investments to the extent we had
previously excluded a related other-than-temporary impairment from
non-GAAP amounts.
|
(e) Mark-to-market adjustment related to unrealized gains on trading
Auction Rate Securities (ARS), partially offset by related
unrealized losses on a put option received in connection with the
ARS. This amount is recorded in “Interest and other income, net.”
|
(f) On April 1, 2009, the Company adopted a fixed, long-term
projected tax rate of 15% for the purposes of evaluating its
operating performance, and to forecast, plan and analyze future
periods.
|
The following table provides further detail on the income statement
classification of certain non-GAAP adjustments that impact cost and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Six Months Ended September 30,
|
|
|
2009
|
|
2008
|
|
|
|
2009
|
|
2008
|
Change in deferred cost of sales:
|
|
|
|
|
|
|
|
|
|
|
Change in deferred product costs
|
|
$
|
(51
|
)
|
$
|
3,366
|
|
|
|
$
|
2,693
|
|
$
|
7,268
|
Change in deferred software amortization and royalties
|
|
|
153
|
|
|
6,067
|
|
|
|
|
2,588
|
|
|
12,762
|
Total change in deferred cost of sales
|
|
$
|
102
|
|
$
|
9,433
|
|
|
|
$
|
5,281
|
|
$
|
20,030
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation and related costs:
|
|
|
|
|
|
|
|
|
|
|
Cost of sales – software amortization and royalties (a)
|
|
$
|
830
|
|
$
|
1,152
|
|
|
|
$
|
1,367
|
|
$
|
1,728
|
Product development (a)
|
|
|
(265
|
)
|
|
724
|
|
|
|
|
322
|
|
|
1,872
|
Selling and marketing (a)
|
|
|
(33
|
)
|
|
866
|
|
|
|
|
64
|
|
|
1,681
|
General and administrative (a)
|
|
|
236
|
|
|
1,792
|
|
|
|
|
1,949
|
|
|
3,575
|
Total stock-based compensation and related costs
|
|
$
|
768
|
|
$
|
4,534
|
|
|
|
$
|
3,702
|
|
$
|
8,856
|
|
|
|
|
|
|
|
|
|
|
|
Business realignment expenses:
|
|
|
|
|
|
|
|
|
|
|
Product development
|
|
$
|
(508
|
)
|
$
|
669
|
|
|
|
$
|
(253
|
)
|
$
|
4,196
|
Selling and marketing
|
|
|
4
|
|
|
—
|
|
|
|
|
497
|
|
|
—
|
General and administrative
|
|
|
(14
|
)
|
|
—
|
|
|
|
|
62
|
|
|
—
|
Restructuring
|
|
|
870
|
|
|
—
|
|
|
|
|
2,522
|
|
|
—
|
Total realignment expenses
|
|
$
|
352
|
|
$
|
669
|
|
|
|
$
|
2,828
|
|
$
|
4,196
|
Notes:
(a) Stock-based compensation expense is net of the impact of the
reversal of a portion of payroll tax accruals established in fiscal 2007
during our historical stock option grant investigation.
|
THQ Inc. and Subsidiaries
|
Unaudited Consolidated Balance Sheets
|
(in thousands)
|
|
|
September 30,
|
|
|
|
March 31,
|
|
2009
|
|
|
|
2009
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
$
|
208,920
|
|
|
|
$
|
140,662
|
Short-term investments, pledged
|
27,786
|
|
|
|
—
|
Accounts receivable, net of allowances
|
7,321
|
|
|
|
60,444
|
Inventory
|
40,443
|
|
|
|
25,785
|
Licenses
|
25,816
|
|
|
|
45,025
|
Software development
|
142,930
|
|
|
|
137,820
|
Deferred income tax
|
7,234
|
|
|
|
6,112
|
Income taxes receivable
|
5,315
|
|
|
|
903
|
Prepaid expenses and other current assets
|
46,703
|
|
|
|
27,441
|
Total current assets
|
512,468
|
|
|
|
444,192
|
|
|
|
|
|
|
Property and equipment, net
|
30,071
|
|
|
|
33,511
|
Licenses, net of current portion
|
36,748
|
|
|
|
47,875
|
Software development, net of current portion
|
48,313
|
|
|
|
24,647
|
Deferred income taxes
|
1,982
|
|
|
|
1,982
|
Long-term investments
|
1,852
|
|
|
|
5,025
|
Long-term investments, pledged
|
—
|
|
|
|
30,618
|
Other long-term assets, net
|
14,317
|
|
|
|
10,479
|
TOTAL ASSETS
|
$
|
645,751
|
|
|
|
$
|
598,329
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Accounts payable
|
$
|
44,355
|
|
|
|
$
|
40,088
|
Accrued and other current liabilities
|
126,577
|
|
|
|
190,140
|
Secured credit lines
|
18,419
|
|
|
|
24,360
|
Total current liabilities
|
189,351
|
|
|
|
254,588
|
|
|
|
|
|
|
Convertible senior notes
|
100,000
|
|
|
|
—
|
Other long-term liabilities
|
21,852
|
|
|
|
33,503
|
Total liabilities
|
311,203
|
|
|
|
288,091
|
Total THQ Inc. stockholders’ equity
|
331,912
|
|
|
|
307,040
|
Noncontrolling interest
|
2,636
|
|
|
|
3,198
|
Total equity
|
334,548
|
|
|
|
310,238
|
TOTAL LIABILITIES AND EQUITY
|
$
|
645,751
|
|
|
|
$
|
598,329
|
|
|
|
|
|
|
|
|
|
THQ Inc. and Subsidiaries
|
Unaudited Supplemental Financial Information
|
(in thousands)
|
|
|
|
Three Months Ended GAAP
|
|
|
|
Six Months Ended GAAP
|
|
|
September 30, 2009
|
|
September 30, 2008
|
|
|
|
September 30, 2009
|
|
September 30, 2008
|
Platform Revenue Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consoles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Microsoft Xbox 360
|
|
$
|
21,698
|
|
21.4
|
%
|
|
$
|
19,978
|
|
12.1
|
%
|
|
|
|
$
|
119,152
|
|
34.5
|
%
|
|
$
|
40,107
|
|
13.3
|
%
|
Nintendo Wii
|
|
|
9,359
|
|
9.2
|
|
|
|
30,504
|
|
18.5
|
|
|
|
|
|
22,652
|
|
6.6
|
|
|
|
53,808
|
|
17.8
|
|
Sony PlayStation 3
|
|
|
17,467
|
|
17.3
|
|
|
|
11,622
|
|
7.1
|
|
|
|
|
|
95,734
|
|
27.8
|
|
|
|
18,275
|
|
6.1
|
|
Sony PlayStation 2
|
|
|
8,189
|
|
8.1
|
|
|
|
13,836
|
|
8.4
|
|
|
|
|
|
14,890
|
|
4.3
|
|
|
|
33,688
|
|
11.1
|
|
Other
|
|
|
—
|
|
—
|
|
|
|
62
|
|
─
|
|
|
|
|
|
5
|
|
─
|
|
|
|
115
|
|
─
|
|
|
|
|
56,713
|
|
56.0
|
|
|
|
76,002
|
|
46.1
|
|
|
|
|
|
252,433
|
|
73.2
|
|
|
|
145,993
|
|
48.3
|
|
Handheld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nintendo Dual Screen
|
|
|
19,842
|
|
19.6
|
|
|
|
48,585
|
|
29.5
|
|
|
|
|
|
39,862
|
|
11.6
|
|
|
|
75,875
|
|
25.1
|
|
Sony PlayStation Portable
|
|
|
7,585
|
|
7.5
|
|
|
|
11,233
|
|
6.8
|
|
|
|
|
|
12,618
|
|
3.7
|
|
|
|
21,613
|
|
7.1
|
|
Wireless
|
|
|
2,779
|
|
2.7
|
|
|
|
6,231
|
|
3.8
|
|
|
|
|
|
6,974
|
|
2.0
|
|
|
|
11,378
|
|
3.8
|
|
Other
|
|
|
—
|
|
—
|
|
|
|
1,511
|
|
0.9
|
|
|
|
|
|
—
|
|
─
|
|
|
|
3,130
|
|
1.0
|
|
|
|
|
30,206
|
|
29.8
|
|
|
|
67,560
|
|
41.0
|
|
|
|
|
|
59,454
|
|
17.3
|
|
|
|
111,996
|
|
37.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PC
|
|
|
14,371
|
|
14.2
|
|
|
|
21,254
|
|
12.9
|
|
|
|
|
|
32,904
|
|
9.5
|
|
|
|
44,405
|
|
14.7
|
|
Total Net Sales
|
|
$
|
101,290
|
|
100.0
|
%
|
|
$
|
164,816
|
|
100.0
|
%
|
|
|
|
$
|
344,791
|
|
100.0
|
%
|
|
$
|
302,394
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Revenue Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
56,471
|
|
55.8
|
%
|
|
$
|
76,502
|
|
46.4
|
%
|
|
|
|
$
|
218,785
|
|
63.5
|
%
|
|
$
|
151,352
|
|
50.1
|
%
|
Foreign
|
|
|
44,819
|
|
44.2
|
|
|
|
88,314
|
|
53.6
|
|
|
|
|
|
126,006
|
|
36.5
|
|
|
|
151,042
|
|
49.9
|
|
Total Net Sales
|
|
$
|
101,290
|
|
100.0
|
%
|
|
$
|
164,816
|
|
100.0
|
%
|
|
|
|
$
|
344,791
|
|
100.0
|
%
|
|
$
|
302,394
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Non-GAAP
|
|
|
|
Six Months Ended Non-GAAP
|
|
|
September 30, 2009
|
|
September 30, 2008
|
|
|
|
September 30, 2009
|
|
September 30, 2008
|
Platform Revenue Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consoles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Microsoft Xbox 360
|
|
$
|
21,634
|
|
21.5
|
%
|
|
$
|
10,016
|
|
6.6
|
%
|
|
|
|
$
|
119,104
|
|
35.6
|
%
|
|
$
|
17,537
|
|
6.4
|
%
|
Nintendo Wii
|
|
|
9,359
|
|
9.3
|
|
|
|
30,504
|
|
20.1
|
|
|
|
|
|
22,652
|
|
6.8
|
|
|
|
53,808
|
|
19.7
|
|
Sony PlayStation 3
|
|
|
17,364
|
|
17.3
|
|
|
|
11,622
|
|
7.7
|
|
|
|
|
|
87,520
|
|
26.2
|
|
|
|
18,275
|
|
6.7
|
|
Sony PlayStation 2
|
|
|
8,190
|
|
8.2
|
|
|
|
13,836
|
|
9.1
|
|
|
|
|
|
14,891
|
|
4.4
|
|
|
|
33,688
|
|
12.4
|
|
Other
|
|
|
—
|
|
—
|
|
|
|
62
|
|
0.1
|
|
|
|
|
|
5
|
|
—
|
|
|
|
115
|
|
0.1
|
|
|
|
|
56,547
|
|
56.3
|
|
|
|
66,040
|
|
43.6
|
|
|
|
|
|
244,172
|
|
73.0
|
|
|
|
123,423
|
|
45.3
|
|
Handheld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nintendo Dual Screen
|
|
|
19,842
|
|
19.8
|
|
|
|
48,585
|
|
32.0
|
|
|
|
|
|
39,862
|
|
11.9
|
|
|
|
75,875
|
|
27.8
|
|
Sony PlayStation Portable
|
|
|
7,585
|
|
7.5
|
|
|
|
11,233
|
|
7.4
|
|
|
|
|
|
12,618
|
|
3.8
|
|
|
|
21,613
|
|
7.9
|
|
Wireless
|
|
|
2,779
|
|
2.8
|
|
|
|
6,231
|
|
4.1
|
|
|
|
|
|
6,974
|
|
2.1
|
|
|
|
11,378
|
|
4.2
|
|
Other
|
|
|
—
|
|
—
|
|
|
|
1,511
|
|
1.0
|
|
|
|
|
|
—
|
|
—
|
|
|
|
3,130
|
|
1.1
|
|
|
|
|
30,206
|
|
30.1
|
|
|
|
67,560
|
|
44.5
|
|
|
|
|
|
59,454
|
|
17.8
|
|
|
|
111,996
|
|
41.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PC
|
|
|
13,628
|
|
13.6
|
|
|
|
18,024
|
|
11.9
|
|
|
|
|
|
30,654
|
|
9.2
|
|
|
|
37,279
|
|
13.7
|
|
Total Net Sales
|
|
$
|
100,381
|
|
100.0
|
%
|
|
$
|
151,624
|
|
100.0
|
%
|
|
|
|
$
|
334,280
|
|
100.0
|
%
|
|
$
|
272,698
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Revenue Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
55,455
|
|
55.2
|
%
|
|
$
|
69,272
|
|
45.7
|
%
|
|
|
|
$
|
214,262
|
|
64.1
|
%
|
|
$
|
136,379
|
|
50.0
|
%
|
Foreign
|
|
|
44,926
|
|
44.8
|
|
|
|
82,352
|
|
54.3
|
|
|
|
|
|
120,018
|
|
35.9
|
|
|
|
136,319
|
|
50.0
|
|
Total Net Sales
|
|
$
|
100,381
|
|
100.0
|
%
|
|
$
|
151,624
|
|
100.0
|
%
|
|
|
|
$
|
334,280
|
|
100.0
|
%
|
|
$
|
272,698
|
|
100.0
|
%
|
Source: THQ Inc.
THQ/Investor & Media Relations Julie MacMedan, 818-871-5125
|