-- Holiday Quarter Marks Beginning of Robust Multi-Year Product Pipeline --
AGOURA HILLS, Calif., Nov 03, 2010 (BUSINESS WIRE) -- THQ Inc. (NASDAQ: THQI) today reported financial results for the fiscal 2011 second quarter ended September 30, 2010, in line with the company's guidance.
For the fiscal second quarter ended September 30, 2010, THQ reported net sales of $77.1 million, compared with $101.3 million in the prior-year period. On a non-GAAP basis, for the three months ended September 30, 2010, the company reported net sales of $70.4 million, compared with $100.4 million a year ago.
For the three months ended September 30, 2010, the company reported a net loss of $47.0 million, or $0.69 per share, compared with a net loss of $5.6 million, or $0.08 per share, in the prior-year period. On a non-GAAP basis, for the three months ended September 30, 2010, the company reported a net loss of $40.6 million, or $0.60 per share, compared with a non-GAAP net loss of $25.2 million, or $0.37 per share, in the prior-year period.
A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.
THQ President and CEO Brian Farrell said, "This holiday begins the consistent flow of quality products that we've been investing in over the past two years. Our December quarter will be led by WWE(R) SmackDown(R) vs. Raw(R) 2011 and our new uDraw(TM)GameTablet(TM). Key releases for our March quarter include our new core game franchise Homefront(TM)as well as WWE(R) All Stars(TM), UFC(R) Personal Trainer(TM)and de Blob(R) 2."
Farrell added, "We continue to invest in our long-term product pipeline, with the recent eight-year extension of our UFC(R) relationship, and the planned addition of Patrice Désilets to our growing team of talented artists creating new intellectual properties for THQ. Our goal this fiscal year continues to be to position THQ for significant growth in fiscal 2012 and beyond, with high quality core games such as Red Faction(R) Armageddon(TM), Warhammer(R) 40,000(R): Space Marine(R), and the next installment of our Saints Row(R) franchise scheduled for release in fiscal 2012. We continue to execute on our strategy of integrating a digital component into all of our key franchises, including downloadable content and games on the iPhone, iPad, Facebook, Xbox LIVE Arcade and PlayStation(R) Network."
Fiscal 2011 Second Quarter Highlights and Recent Developments
- On August 17, 2010, THQ unveiled its new uDraw GameTablet, a first-of-its-kind, innovative new gaming accessory developed by THQ for the Wii(TM). The uDraw GameTablet is scheduled to hit U.S. retail store shelves on November 14, 2010.
- On October 19, 2010, THQ announced its plans for talented game developer Patrice Désilets, creative director on the Assassin's Creed franchise, to join the company next summer to form a new THQ-owned development studio in Montreal, Quebec, with the purpose of creating new intellectual properties.
- On October 19, 2010, THQ announced that it extended its exclusive, worldwide agreement with Zuffa, LLC to publish video games and social and mobile applications based on the Ultimate Fighting Championship(R) brand through 2018.
- On October 18, 2010, the company announced a new multi-year licensing agreement with Nickelodeon, granting THQ the worldwide rights to continue to develop and publish video games based on the highly popular SpongeBob(TM) SquarePants(TM) franchise.
Business Outlook
Fiscal Year Ending March 31, 2011
The company expects to report non-GAAP fiscal 2011 net sales in the range of $825 - $855 million and a non-GAAP loss per share in the range of $0.10 - $0.20 for the full year.
Fiscal Third Quarter Ending December 31, 2010
THQ expects to report non-GAAP fiscal 2011 third quarter net sales in the range of $300 - $315 million, and non-GAAP earnings per share in the range of $0.20 - $0.30, before applying the "if converted" method of calculating EPS, and $0.19 - $0.27 after applying the "if converted" method of calculating EPS.
Fiscal Fourth Quarter Ending March 31, 2011
THQ expects to report non-GAAP fiscal 2011 fourth quarter net sales in the range of $295 - $310 million, and non-GAAP earnings per share in the range of $0.35 - $0.45, before applying the "if converted" method of calculating EPS, and $0.31 - $0.40 after applying the "if converted" method of calculating EPS.
The "if converted" method of calculating EPS should be applied in any quarter with net income of at least $8 million and in any full year with net income of at least $32 million.
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 certain 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 investments, and
- material litigation settlements, charges and benefits.
For non-GAAP purposes, the company uses 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 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 primary 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 this 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 of 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. The company recognizes 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 all or a portion of its net revenue and costs with respect to these titles, there is no impact to its operating cash flow. THQ's management excludes the impact of deferred net revenue and costs when evaluating the company's operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.
Business Realignment Expense. Although THQ has incurred business realignment expenses in the past, each charge relates to a discrete event based on a unique set of business objectives. Management does not believe these charges reflect the company's primary business, ongoing operating results or future outlook. As such, the company believes it is appropriate to exclude these expenses from its non-GAAP financial measures.
Fiscal Periods
Our fiscal year ends on the Saturday nearest March 31st. For simplicity, we present all fiscal periods as ending on a calendar month end. Our fiscal 2011 second quarter ended on October 2, 2010. Our fiscal 2010 second quarter ended on September 26, 2009. The fiscal three month periods ended September 30, 2010 and 2009 consisted of 13 weeks.
Investor Conference Call
THQ will host a conference call to discuss fiscal 2011 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 17900312 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 5, 2010, by dialing 800-642-1687, domestic, or 706-645-9291, international, conference ID 17900312.
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 http://www.thq.com. THQ, de Blob, Homefront, Red Faction Armageddon, Saints Row, uDraw, uDraw GameTablet 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 Arcade logo are either registered trademarks or trademarks of Microsoft Corporation in the U.S. and/or other countries.
"PlayStation" is a registered trademark of Sony Computer Entertainment Inc.
Wii, Nintendo DS and Nintendo DSi 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 third and fourth quarters and full fiscal year ending March 31, 2011, 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. 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, 2010, 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, |
|
|
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
2010 |
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
$ |
77,053 |
|
|
|
|
$ |
101,290 |
|
|
|
|
$ |
226,432 |
|
|
|
|
$ |
344,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs |
|
|
|
|
|
35,003 |
|
|
|
|
38,975 |
|
|
|
|
95,706 |
|
|
|
|
118,904 |
|
Software amortization and royalties |
|
|
|
|
|
21,162 |
|
|
|
|
24,191 |
|
|
|
|
54,515 |
|
|
|
|
69,227 |
|
License amortization and royalties |
|
|
|
|
|
9,583 |
|
|
|
|
(9,049 |
) |
|
|
|
30,473 |
|
|
|
|
23,490 |
|
Total cost of sales |
|
|
|
|
|
65,748 |
|
|
|
|
54,117 |
|
|
|
|
180,694 |
|
|
|
|
211,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
11,305 |
|
|
|
|
47,173 |
|
|
|
|
45,738 |
|
|
|
|
133,170 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development |
|
|
|
|
|
17,900 |
|
|
|
|
19,304 |
|
|
|
|
34,375 |
|
|
|
|
41,462 |
|
Selling and marketing |
|
|
|
|
|
24,023 |
|
|
|
|
19,028 |
|
|
|
|
57,649 |
|
|
|
|
57,471 |
|
General and administrative |
|
|
|
|
|
11,878 |
|
|
|
|
14,055 |
|
|
|
|
23,722 |
|
|
|
|
30,633 |
|
Restructuring |
|
|
|
|
|
(161 |
) |
|
|
|
870 |
|
|
|
|
7 |
|
|
|
|
2,522 |
|
Total operating expenses |
|
|
|
|
|
53,640 |
|
|
|
|
53,257 |
|
|
|
|
115,753 |
|
|
|
|
132,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
|
|
|
(42,335 |
) |
|
|
|
(6,084 |
) |
|
|
|
(70,015 |
) |
|
|
|
1,082 |
|
Interest and other income (expense), net |
|
|
|
|
|
(3,991 |
) |
|
|
|
290 |
|
|
|
|
(5,581 |
) |
|
|
|
349 |
|
Income (loss) before income taxes |
|
|
|
|
|
(46,326 |
) |
|
|
|
(5,794 |
) |
|
|
|
(75,596 |
) |
|
|
|
1,431 |
|
Income taxes |
|
|
|
|
|
659 |
|
|
|
|
154 |
|
|
|
|
1,499 |
|
|
|
|
1,154 |
|
Net income (loss) prior to allocation of noncontrolling interest |
|
|
|
|
|
(46,985 |
) |
|
|
|
(5,948 |
) |
|
|
|
(77,095 |
) |
|
|
|
277 |
|
Loss attributable to noncontrolling interest |
|
|
|
|
|
-- |
|
|
|
|
378 |
|
|
|
|
-- |
|
|
|
|
562 |
|
Net income (loss) attributable to THQ Inc. |
|
|
|
|
|
$ |
(46,985 |
) |
|
|
|
$ |
(5,570 |
) |
|
|
|
$ |
(77,095 |
) |
|
|
|
$ |
839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to THQ Inc. - basic |
|
|
|
|
|
$ |
(0.69 |
) |
|
|
|
$ |
(0.08 |
) |
|
|
|
$ |
(1.14 |
) |
|
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share attributable to THQ Inc. - diluted |
|
|
|
|
|
$ |
(0.69 |
) |
|
|
|
$ |
(0.08 |
) |
|
|
|
$ |
(1.14 |
) |
|
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation - basic |
|
|
|
|
|
67,813 |
|
|
|
|
67,462 |
|
|
|
|
67,779 |
|
|
|
|
67,466 |
|
Shares used in per share calculation - diluted |
|
|
|
|
|
67,813 |
|
|
|
|
67,462 |
|
|
|
|
67,779 |
|
|
|
|
67,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
2010 |
|
|
|
2009 |
| Net sales |
|
|
|
|
|
$ |
77,053 |
|
|
|
|
$ |
101,290 |
|
|
|
|
$ |
226,432 |
|
|
|
|
$ |
344,791 |
|
| Changes in deferred net revenue |
|
|
|
|
|
(6,658 |
) |
|
|
|
(909 |
) |
|
|
|
4,232 |
|
|
|
|
(10,511 |
) |
| Non-GAAP net sales |
|
|
|
|
|
$ |
70,395 |
|
|
|
|
$ |
100,381 |
|
|
|
|
$ |
230,664 |
|
|
|
|
$ |
334,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
|
|
Six Months Ended
September 30, |
|
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
2010 |
|
|
|
2009 |
| Operating income (loss) |
|
|
|
|
|
$ |
(42,335 |
) |
|
|
|
$ |
(6,084 |
) |
|
|
|
$ |
(70,015 |
) |
|
|
|
$ |
1,082 |
|
| Non-GAAP adjustments affecting operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| JAKKS preferred return rate reduction (b) |
|
|
|
|
|
-- |
|
|
|
|
(24,221 |
) |
|
|
|
-- |
|
|
|
|
(24,221 |
) |
| Change in deferred net revenue |
|
|
|
|
|
(6,658 |
) |
|
|
|
(909 |
) |
|
|
|
4,232 |
|
|
|
|
(10,511 |
) |
| Change in deferred cost of sales (c) |
|
|
|
|
|
1,075 |
|
|
|
|
102 |
|
|
|
|
(179 |
) |
|
|
|
5,281 |
|
| Business realignment expenses (c) |
|
|
|
|
|
(161 |
) |
|
|
|
352 |
|
|
|
|
7 |
|
|
|
|
2,828 |
|
| Stock-based compensation and related costs (c) |
|
|
|
|
|
1,829 |
|
|
|
|
768 |
|
|
|
|
4,357 |
|
|
|
|
3,702 |
|
| Total non-GAAP adjustments affecting operating income (loss) |
|
|
|
|
|
(3,915 |
) |
|
|
|
(23,908 |
) |
|
|
|
8,417 |
|
|
|
|
(22,921 |
) |
| Non-GAAP operating loss |
|
|
|
|
|
$ |
(46,250 |
) |
|
|
|
$ |
(29,992 |
) |
|
|
|
$ |
(61,598 |
) |
|
|
|
$ |
(21,839 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
|
|
Six Months Ended
September 30, |
|
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
2010 |
|
|
|
2009 |
| Net income (loss) attributable to THQ Inc. |
|
|
|
|
|
$ |
(46,985 |
) |
|
|
|
$ |
(5,570 |
) |
|
|
|
$ |
(77,095 |
) |
|
|
|
$ |
839 |
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP adjustments affecting operating income (loss) |
|
|
|
|
|
(3,915 |
) |
|
|
|
(23,908 |
) |
|
|
|
8,417 |
|
|
|
|
(22,921 |
) |
| Gain on sale of investments (d) |
|
|
|
|
|
-- |
|
|
|
|
(152 |
) |
|
|
|
-- |
|
|
|
|
(640 |
) |
| Mark-to-market adjustments on investments (e) |
|
|
|
|
|
2,524 |
|
|
|
|
(234 |
) |
|
|
|
2,524 |
|
|
|
|
(95 |
) |
| Interest and other income, net |
|
|
|
|
|
-- |
|
|
|
|
(63 |
) |
|
|
|
-- |
|
|
|
|
(63 |
) |
| Income tax adjustments (f) |
|
|
|
|
|
7,817 |
|
|
|
|
4,678 |
|
|
|
|
11,197 |
|
|
|
|
4,498 |
|
| Non-GAAP net loss |
|
|
|
|
|
$ |
(40,559 |
) |
|
|
|
$ |
(25,249 |
) |
|
|
|
$ |
(54,957 |
) |
|
|
|
$ |
(18,382 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP loss per share - diluted (g) |
|
|
|
|
|
$ |
(0.60 |
) |
|
|
|
$ |
(0.37 |
) |
|
|
|
$ |
(0.81 |
) |
|
|
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 adjustments, including the impact of changes in foreign currency rates, related to certain of our available-for-sale investment securities; these amounts are recorded in "Accumulated other comprehensive income," a component of stockholders' equity, on our balance sheet until realized. Adjustment also may include 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) |
|
For non-GAAP purposes, the Company uses a fixed, long-term projected tax rate of 15% to evaluate its operating performance, as well as to forecast, plan and analyze future periods. |
|
|
|
(g) |
|
Non-GAAP loss per share - diluted has not been calculated using the "if-converted" method relative to the Convertible Senior Notes (Notes) issued in August 2009 as their inclusion would have been anti-dilutive. |
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
2010 |
|
|
|
2009 |
|
Change in deferred cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in deferred product costs |
|
|
|
|
|
$ |
119 |
|
|
|
|
$ |
(51 |
) |
|
|
|
$ |
467 |
|
|
|
|
$ |
2,693 |
|
|
Change in deferred software amortization and royalties |
|
|
|
|
|
-- |
|
|
|
|
153 |
|
|
|
|
-- |
|
|
|
|
2,588 |
|
|
Change in deferred license amortization and royalties |
|
|
|
|
|
956 |
|
|
|
|
-- |
|
|
|
|
(646 |
) |
|
|
|
-- |
|
|
Total change in deferred cost of sales |
|
|
|
|
|
$ |
1,075 |
|
|
|
|
$ |
102 |
|
|
|
|
$ |
(179 |
) |
|
|
|
$ |
5,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business realignment expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product development |
|
|
|
|
|
$ |
-- |
|
|
|
|
$ |
(508 |
) |
|
|
|
$ |
-- |
|
|
|
|
$ |
(253 |
) |
|
Selling and marketing |
|
|
|
|
|
-- |
|
|
|
|
4 |
|
|
|
|
-- |
|
|
|
|
497 |
|
|
General and administrative |
|
|
|
|
|
-- |
|
|
|
|
(14 |
) |
|
|
|
-- |
|
|
|
|
62 |
|
|
Restructuring |
|
|
|
|
|
(161 |
) |
|
|
|
870 |
|
|
|
|
7 |
|
|
|
|
2,522 |
|
|
Total business realignment expenses |
|
|
|
|
|
$ |
(161 |
) |
|
|
|
$ |
352 |
|
|
|
|
$ |
7 |
|
|
|
|
$ |
2,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation and related costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales - software amortization and royalties (a) |
|
|
|
|
|
$ |
548 |
|
|
|
|
$ |
830 |
|
|
|
|
$ |
819 |
|
|
|
|
$ |
1,367 |
|
|
Product development (a) |
|
|
|
|
|
(118 |
) |
|
|
|
(265 |
) |
|
|
|
623 |
|
|
|
|
322 |
|
|
Selling and marketing (a) |
|
|
|
|
|
318 |
|
|
|
|
(33 |
) |
|
|
|
676 |
|
|
|
|
64 |
|
|
General and administrative (a) |
|
|
|
|
|
1,081 |
|
|
|
|
236 |
|
|
|
|
2,239 |
|
|
|
|
1,949 |
|
|
Total stock-based compensation and related costs |
|
|
|
|
|
$ |
1,829 |
|
|
|
|
$ |
768 |
|
|
|
|
$ |
4,357 |
|
|
|
|
$ |
3,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes: |
|
|
|
(a) |
|
Stock-based compensation expense for the three and six months ended September 30, 2009 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,
2010 |
|
|
|
|
|
March 31,
2010 |
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash, cash equivalents and short-term investments |
|
|
|
|
|
$ |
122,763 |
|
|
|
|
|
|
$ |
271,319 |
| Short-term investments, pledged |
|
|
|
|
|
-- |
|
|
|
|
|
|
22,774 |
| Accounts receivable, net of allowances |
|
|
|
|
|
10,511 |
|
|
|
|
|
|
41,318 |
| Inventory |
|
|
|
|
|
21,234 |
|
|
|
|
|
|
13,970 |
| Licenses |
|
|
|
|
|
74,998 |
|
|
|
|
|
|
56,555 |
| Software development |
|
|
|
|
|
170,271 |
|
|
|
|
|
|
132,223 |
| Deferred income taxes |
|
|
|
|
|
7,297 |
|
|
|
|
|
|
5,590 |
| Income taxes receivable |
|
|
|
|
|
1,067 |
|
|
|
|
|
|
4,914 |
| Prepaid expenses and other current assets |
|
|
|
|
|
40,347 |
|
|
|
|
|
|
13,864 |
| Total current assets |
|
|
|
|
|
448,488 |
|
|
|
|
|
|
562,527 |
| Property and equipment, net |
|
|
|
|
|
31,038 |
|
|
|
|
|
|
28,374 |
| Licenses, net of current portion |
|
|
|
|
|
95,436 |
|
|
|
|
|
|
83,752 |
| Software development, net of current portion |
|
|
|
|
|
53,802 |
|
|
|
|
|
|
26,792 |
| Deferred income taxes |
|
|
|
|
|
433 |
|
|
|
|
|
|
433 |
| Long-term investments |
|
|
|
|
|
1,892 |
|
|
|
|
|
|
1,851 |
| Other long-term assets, net |
|
|
|
|
|
12,271 |
|
|
|
|
|
|
10,600 |
| TOTAL ASSETS |
|
|
|
|
|
$ |
643,360 |
|
|
|
|
|
|
$ |
714,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
|
|
|
|
$ |
59,167 |
|
|
|
|
|
|
$ |
40,305 |
| Accrued and other current liabilities |
|
|
|
|
|
141,677 |
|
|
|
|
|
|
137,332 |
| Secured credit line |
|
|
|
|
|
-- |
|
|
|
|
|
|
13,249 |
| Total current liabilities |
|
|
|
|
|
200,844 |
|
|
|
|
|
|
190,886 |
| Other long-term liabilities |
|
|
|
|
|
82,856 |
|
|
|
|
|
|
98,825 |
| Convertible senior notes |
|
|
|
|
|
100,000 |
|
|
|
|
|
|
100,000 |
| Total liabilities |
|
|
|
|
|
383,700 |
|
|
|
|
|
|
389,711 |
| Total THQ Inc. stockholders' equity |
|
|
|
|
|
259,660 |
|
|
|
|
|
|
324,355 |
| Noncontrolling interest |
|
|
|
|
|
-- |
|
|
|
|
|
|
263 |
| Total equity |
|
|
|
|
|
259,660 |
|
|
|
|
|
|
324,618 |
| TOTAL LIABILITIES AND EQUITY |
|
|
|
|
|
$ |
643,360 |
|
|
|
|
|
|
$ |
714,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THQ Inc. and Subsidiaries
Unaudited Supplemental Financial Information
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended GAAP |
|
|
|
Six Months Ended GAAP |
| Platform Revenue Mix |
|
|
|
September 30,
2010 |
|
|
|
September 30,
2009 |
|
|
|
September 30,
2010 |
|
|
|
September 30,
2009 |
| Consoles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Microsoft Xbox 360 |
|
|
|
$ |
14,260 |
|
|
|
|
18.5 |
% |
|
|
|
$ |
21,698 |
|
|
|
|
21.4 |
% |
|
|
|
$ |
58,773 |
|
|
|
|
26.0 |
% |
|
|
|
$ |
119,152 |
|
|
34.5 |
% |
| Nintendo Wii |
|
|
|
13,011 |
|
|
|
|
16.9 |
|
|
|
|
9,359 |
|
|
|
|
9.2 |
|
|
|
|
32,171 |
|
|
|
|
14.2 |
|
|
|
|
22,652 |
|
|
6.6 |
|
| Sony PlayStation 3 |
|
|
|
12,279 |
|
|
|
|
15.9 |
|
|
|
|
17,467 |
|
|
|
|
17.3 |
|
|
|
|
59,733 |
|
|
|
|
26.4 |
|
|
|
|
95,734 |
|
|
27.8 |
|
| Sony PlayStation 2 |
|
|
|
1,903 |
|
|
|
|
2.5 |
|
|
|
|
8,189 |
|
|
|
|
8.1 |
|
|
|
|
6,606 |
|
|
|
|
2.9 |
|
|
|
|
14,890 |
|
|
4.3 |
|
| Other |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
5 |
|
|
-- |
|
|
|
|
|
41,453 |
|
|
|
|
53.8 |
|
|
|
|
56,713 |
|
|
|
|
56.0 |
|
|
|
|
157,283 |
|
|
|
|
69.5 |
|
|
|
|
252,433 |
|
|
73.2 |
|
| Handheld |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nintendo Dual Screen |
|
|
|
17,246 |
|
|
|
|
22.4 |
|
|
|
|
19,842 |
|
|
|
|
19.6 |
|
|
|
|
36,912 |
|
|
|
|
16.3 |
|
|
|
|
39,862 |
|
|
11.6 |
|
| Sony PlayStation Portable |
|
|
|
6,862 |
|
|
|
|
8.9 |
|
|
|
|
7,585 |
|
|
|
|
7.5 |
|
|
|
|
11,203 |
|
|
|
|
4.9 |
|
|
|
|
12,618 |
|
|
3.7 |
|
| Wireless |
|
|
|
1,499 |
|
|
|
|
1.9 |
|
|
|
|
2,779 |
|
|
|
|
2.7 |
|
|
|
|
3,088 |
|
|
|
|
1.4 |
|
|
|
|
6,974 |
|
|
2.0 |
|
|
|
|
|
25,607 |
|
|
|
|
33.2 |
|
|
|
|
30,206 |
|
|
|
|
29.8 |
|
|
|
|
51,203 |
|
|
|
|
22.6 |
|
|
|
|
59,454 |
|
|
17.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PC |
|
|
|
9,993 |
|
|
|
|
13.0 |
|
|
|
|
14,371 |
|
|
|
|
14.2 |
|
|
|
|
17,946 |
|
|
|
|
7.9 |
|
|
|
|
32,904 |
|
|
9.5 |
|
| Total net sales |
|
|
|
$ |
77,053 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
101,290 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
226,432 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
344,791 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Geographic Revenue Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
|
$ |
45,253 |
|
|
|
|
58.7 |
% |
|
|
|
$ |
56,471 |
|
|
|
|
55.8 |
% |
|
|
|
$ |
146,388 |
|
|
|
|
64.6 |
% |
|
|
|
$ |
218,785 |
|
|
63.5 |
% |
| Foreign |
|
|
|
31,800 |
|
|
|
|
41.3 |
|
|
|
|
44,819 |
|
|
|
|
44.2 |
|
|
|
|
80,044 |
|
|
|
|
35.4 |
|
|
|
|
126,006 |
|
|
36.5 |
|
| Total Net Sales |
|
|
|
$ |
77,053 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
101,290 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
226,432 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
344,791 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Non-GAAP |
|
|
|
Six Months Ended Non-GAAP |
| Platform Revenue Mix |
|
|
|
September 30,
2010 |
|
|
|
September 30,
2009 |
|
|
|
September 30,
2010 |
|
|
|
September 30,
2009 |
| Consoles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Microsoft Xbox 360 |
|
|
|
$ |
10,996 |
|
|
|
|
15.6 |
% |
|
|
|
$ |
21,634 |
|
|
|
|
21.5 |
% |
|
|
|
$ |
61,211 |
|
|
|
|
26.5 |
% |
|
|
|
$ |
119,104 |
|
|
35.6 |
% |
| Nintendo Wii |
|
|
|
13,011 |
|
|
|
|
18.5 |
|
|
|
|
9,359 |
|
|
|
|
9.3 |
|
|
|
|
32,171 |
|
|
|
|
13.9 |
|
|
|
|
22,652 |
|
|
6.8 |
|
| Sony PlayStation 3 |
|
|
|
8,953 |
|
|
|
|
12.7 |
|
|
|
|
17,364 |
|
|
|
|
17.3 |
|
|
|
|
61,747 |
|
|
|
|
26.8 |
|
|
|
|
87,520 |
|
|
26.2 |
|
| Sony PlayStation 2 |
|
|
|
1,903 |
|
|
|
|
2.7 |
|
|
|
|
8,190 |
|
|
|
|
8.2 |
|
|
|
|
6,606 |
|
|
|
|
2.9 |
|
|
|
|
14,891 |
|
|
4.4 |
|
| Other |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
-- |
|
|
|
|
5 |
|
|
-- |
|
|
|
|
|
34,863 |
|
|
|
|
49.5 |
|
|
|
|
56,547 |
|
|
|
|
56.3 |
|
|
|
|
161,735 |
|
|
|
|
70.1 |
|
|
|
|
244,172 |
|
|
73.0 |
|
| Handheld |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nintendo Dual Screen |
|
|
|
17,246 |
|
|
|
|
24.5 |
|
|
|
|
19,842 |
|
|
|
|
19.8 |
|
|
|
|
36,912 |
|
|
|
|
16.0 |
|
|
|
|
39,862 |
|
|
11.9 |
|
| Sony PlayStation Portable |
|
|
|
6,862 |
|
|
|
|
9.8 |
|
|
|
|
7,585 |
|
|
|
|
7.5 |
|
|
|
|
11,203 |
|
|
|
|
4.9 |
|
|
|
|
12,618 |
|
|
3.8 |
|
| Wireless |
|
|
|
1,499 |
|
|
|
|
2.1 |
|
|
|
|
2,779 |
|
|
|
|
2.8 |
|
|
|
|
3,088 |
|
|
|
|
1.3 |
|
|
|
|
6,974 |
|
|
2.1 |
|
|
|
|
|
25,607 |
|
|
|
|
36.4 |
|
|
|
|
30,206 |
|
|
|
|
30.1 |
|
|
|
|
51,203 |
|
|
|
|
22.2 |
|
|
|
|
59,454 |
|
|
17.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PC |
|
|
|
9,925 |
|
|
|
|
14.1 |
|
|
|
|
13,628 |
|
|
|
|
13.6 |
|
|
|
|
17,726 |
|
|
|
|
7.7 |
|
|
|
|
30,654 |
|
|
9.2 |
|
| Total net sales |
|
|
|
$ |
70,395 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
100,381 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
230,664 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
334,280 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Geographic Revenue Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
|
|
$ |
41,111 |
|
|
|
|
58.4 |
% |
|
|
|
|
$ |
55,455 |
|
|
|
|
55.2 |
% |
|
|
|
$ |
149,137 |
|
|
|
|
64.7 |
% |
|
|
|
$ |
214,262 |
|
|
64.1 |
% |
| Foreign |
|
|
|
29,284 |
|
|
|
|
41.6 |
|
|
|
|
44,926 |
|
|
|
|
44.8 |
|
|
|
|
81,527 |
|
|
|
|
35.3 |
|
|
|
|
120,018 |
|
|
35.9 |
|
| Total Net Sales |
|
|
|
$ |
70,395 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
100,381 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
230,664 |
|
|
|
|
100.0 |
% |
|
|
|
$ |
334,280 |
|
|
100.0 |
% |
SOURCE: THQ Inc.
THQ/Investor & Media Relations
Julie MacMedan, 818-871-5125 |
