Exhibit 99.1

 

FOR IMMEDIATE RELEASE

Julie MacMedan

THQ/Investor Relations

818/871-5095

 

Kristina Kirk

THQ/Media Relations

818/871-5119

 

THQ FISCAL 2006 FIRST QUARTER RESULTS BEAT EXPECTATIONS

 

— New Original Properties Destroy All Humans!Ô and JuicedÔ Expand Franchise Portfolio —

— Management Reiterates Guidance for Fiscal 2006 —

 

CALABASAS HILLS, Calif. – August 3, 2005 – THQ Inc. (NASDAQ: THQI) today announced that strong performance of two new original franchise titles drove better-than-expected operating results for the first quarter of fiscal 2006.

 

For the three months ended June 30, 2005, THQ reported net sales of $158.0 million and a net loss of $4.0 million, or $0.10 per share.  Operating results exceeded the company’s previous guidance of net sales of $135-$140 million and a loss of $0.15 per share, primarily due to strong sales of two new original properties, Destroy All Humans!Ôand JuicedÔ, as well as WWEÔ WrestlemaniaÔ 21.  For the same period a year ago, THQ reported net sales of $88.2 million and a net loss of $3.9 million, or $0.10 per share.

 

“To date, THQ has shipped more than one million units of each of our new original properties Destroy All Humans! and Juiced.  The success of these new titles significantly expands THQ’s portfolio of predictable, recurring franchises,” said Brian Farrell, president and CEO, THQ.  “We plan to continue to leverage these brands on current and next-generation consoles.”

 

Farrell added, “Fiscal 2006 is off to a great start with the performance of two new original properties.  Our release schedule over the next few quarters will feature such proven brands as WWEÔ SmackDown!Ô, SpongeBob SquarePantsÔ, The Incredibles, Full Spectrum WarriorÔ, Tak and WarhammerÒ 40,000: Dawn of WarÔ.”

 

Fiscal 2006 Guidance

THQ reaffirmed previous guidance for the full fiscal year ending March 31, 2006, and provided initial guidance for the fiscal second quarter ending September 30, 2005:

 

•                  Consistent with previous guidance, for the fiscal year ending March 31, 2006, THQ expects net sales of approximately $750 million and net income of approximately $1.00 per diluted share.

•                  For the second quarter of fiscal 2006, the company expects net sales of approximately $125 million and a net loss of about $0.10 per share.

 

 

Recent Developments:

•                  THQ established two new franchises, Destroy All Humans! and Juiced.  Each title has shipped more than one million units to date and achieved top sell-through rankings in North America, Europe and Asia Pacific.

•                  THQ was the #2 independent publisher in North America and the #3 independent publisher in the UK and Australia/New Zealand for the first half of calendar 2005, according to the NPD Group, Inc., Chart Track and GfK, respectively.

•                  THQ expanded its portfolio of original intellectual properties:

•                  Internally developed Windows PC title Company of HeroesÔ from Relic Entertainment was named Best Strategy Game at this year’s Electronic Entertainment Expo (E3).

•                  THQ’s new upcoming action-RPG title Titan QuestÔ from Iron Lore was named to PC Gamers’ Top Ten at E3.

•                  THQ secured the publishing rights to the new critically acclaimed Real-Time-Strategy PC title Supreme Commander from Gas Powered Games.

•                  THQ demonstrated its commitment to developing new original properties for next-generation consoles using its strong internal studio organization with the debut at E3 of Saint’s RowÔ from Volition, Inc. and The OutfitÔ from Relic Entertainment.

•                  THQ expanded its internal development capabilities to 11 studios and nearly 1,000 employees.  THQ has also formed a new studio based in New York focused on next-generation game development.

 

Investor Conference Call

THQ will host a conference call to discuss fiscal first quarter results today at 5:00 p.m. Eastern/2:00 p.m. Pacific. Please dial (866) 800-8651 or (617) 614-2704 to listen to the call or visit the THQ Inc. Investor Relations Home page at www.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 August 5, 2005 by dialing (888) 286-8010 or (617) 801-6888 access code 31168377.

 

 

THQ Inc. (NASDAQ: THQI) is a leading worldwide developer and publisher of interactive entertainment software.  The company develops its products for all popular game systems, personal computers and wireless devices.   Headquartered in Los Angeles County, California, THQ sells product through its global network of offices located in the United States, United Kingdom, France, Germany, Spain, Korea and Australia.  More information about THQ and its products may be found at www.thq.com and www.thqwireless.com. THQ, THQ Wireless, Relic Entertainment, Volition, Inc., Destroy All Humans!, Juiced, Company of Heroes, Saint’s Row, The Outfit and their respective logos are trademarks and/or registered trademarks of THQ Inc.

 

 

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 revenue and earnings per share for the quarter ending September 30, 2005 and the fiscal year ending March 31, 2006 and for the company’s product releases and financial performance 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, 2005, 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.

 

# # #

(Tables Follow)

 

 

THQ Inc.

First Quarter 2006 Earnings Announcement

 

Consolidated Statements of Operations

(In thousands, except per share data)

 

Table 1

 

		Three Months Ended June 30,
		2005			2004
Net sales		$	157,967		$	88,194
Costs and expenses:
Cost of sales		54,309			33,774
License amortization and royalties		13,724			7,007
Software development amortization		23,345			12,915
Product development		19,060			9,982
Selling and marketing		36,960			18,196
Payment to venture partner		1,912			524
General and administrative		16,479			12,816
Total costs and expenses		165,789			95,214
Loss from operations		(7,822		)	(7,020		)
Interest income		2,166			972
Loss before income taxes and minority interest		(5,656		)	(6,048		)
Income taxes		(1,753		)	(2,147		)
Loss before minority interest		(3,903		)	(3,901		)
Minority interest		(57		)	—
Net loss		$	(3,960	)	$	(3,901	)
Net loss per share – diluted		$	(0.10	)	$	(0.10	)
Shares used in per share calculation – diluted		40,619			38,384

 

The above table reflects our Consolidated Statement of Operations in accordance with U.S. Generally Accepted Accounting Principles.

 

 

THQ Inc.

First Quarter 2006 Earnings Announcement

 

Table 2

 

		Balance Sheets
		(In thousands)
		June 30,			March 31,
		2005			2005
ASSETS
Cash, cash equivalents and short-term investments		$	312,888		$	331,173
Accounts receivable – net		85,880			73,700
Inventory		26,996			23,802
Licenses		23,998			12,464
Software development		62,243			57,107
Income taxes receivable		15,700			9,783
Prepaid expenses and other current assets		10,190			14,530
Total current assets		537,895			522,559
Property and equipment, net		30,875			26,822
Licenses – net of current portion		64,024			75,523
Software development – net of current portion		10,942			8,144
Income taxes receivable– net of current portion		9,513			9,513
Goodwill – net		85,719			83,440
Other long-term assets – net		24,538			21,392
Total assets		$	763,506		$	747,393
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY
Accounts payable		$	40,863		$	36,499
Accrued and other current liabilities		79,462			77,532
Deferred income taxes		8,769			6,841
Total current liabilities		129,094			120,872
Other long-term liabilities		71,654			72,059
Deferred income taxes – net of current portion		4,466			4,466
Minority interest		1,341			1,238
Common stock		410			405
Additional paid-in capital		359,262			347,664
Accumulated other comprehensive income		13,401			12,851
Retained earnings		183,878			187,838
Total stockholders’ equity		556,951			548,758
Total liabilities, minority interest and stockholders’ equity		$	763,506		$	747,393

 

 

THQ Inc.

Supplementary Tables

 

		Three Months Ended June 30,
		2005		2004
Platform Revenue Mix
Consoles
PlayStation 2		38.2	%	22.0	%
Xbox		27.2		27.9
Game Cube		2.1		4.6
		67.5		54.5
Handheld
Game Boy Advance		16.9		27.8
Dual Screen		0.0		0.0
Wireless		6.5		3.2
		23.4		31.0
PC		8.9		10.7
Other		0.2		3.8
		100.0	%	100.0	%
Geographic Revenue Mix
North America		54.6	%	59.3	%
International		45.4		40.7
		100.0	%	100.0	%