THQ REPORTS FISCAL 2009 3rd QUARTER RESULTS
- 02/04/2009 (6:18:39 pm)
- Press Release
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THQ Reports Fiscal 2009 Third Quarter Results
Company Announces Additional Business Realignment Actions Q3 GAAP Results Include $118.1 Million Non-Cash Goodwill Impairment Charge
AGOURA HILLS, Calif.--(BUSINESS WIRE)--THQ Inc. (NASDAQ: THQI - News) today announced financial results for the fiscal third quarter ended December 31, 2008.
For the three months ended December 31, 2008, THQ reported net sales of $357.3 million. On a non-GAAP basis, the company reported fiscal 2009 third quarter net sales of $385.6 million. A year ago, the company reported net sales of $509.6 million, for both GAAP and non-GAAP comparison purposes.
For the three months ended December 31, 2008, the company reported a net loss of $191.8 million, or $2.86 per share, which included a non-cash charge of $118.1 million related to goodwill impairment. In the same period a year ago, the company reported net income of $15.5 million, or $0.23 per share. On a non-GAAP basis, the company reported a fiscal 2009 third quarter net loss of $9.6 million, or $0.14 per share. In the same period a year ago, the company reported non-GAAP net income of $16.4 million, or $0.24 per share, which included a gain of $0.02 per share from discontinued operations. A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.
“We delivered high quality games to market this holiday season but fell short of our revenue and profit targets in this challenging environment,” said Brian Farrell, THQ president and CEO. “We are taking highly targeted actions with the objective of investing in games with the highest franchise potential and returning to profitability. We have executed on our previously announced plan to reduce our cost structure by $120 million. Given continued economic weakness, we plan to reduce costs by an additional $100 million.”
Strategic Plan
In November, the company announced a new strategic plan to focus on 1) developing a select number of high quality titles targeted at the core gamer, such as Saints Row 2 and the upcoming Red Faction: Guerrilla and Darksiders; 2) extending its leadership in the fighting category with such brands as WWE and Ultimate Fighting Championship; 3) reinvigorating the product portfolio and improving profitability in its kids’ business; 4) building strong casual game franchises like de Blob, Drawn to Life and Big Beach Sports; and 5) extending its brands into emerging online markets with games such as Company of Heroes Online and its Warhammer 40,000 MMO. The company also announced plans to align its organization and cost structure to support this strategy.
The company noted the following product highlights in fiscal 2009:
Saints Row 2 achieved a Metacritic rating of 82 and shipped more than 2.6 million units to date
WWE SmackDown vs. Raw 2009 achieved a Metacritic rating of 80 and shipped more than 4 million units to date
de Blob achieved a Metacritic rating of 81 and shipped approximately 700,000 units to date
Big Beach Sports shipped more than 1.2 million units to date
“Established franchises like Saints Row and WWE SmackDown vs. Raw, as well as new franchises such as de Blob and Big Beach Sports for the Nintendo Wii, give us confidence in our strategy going forward,” said Farrell. “We have several compelling games set to launch in the coming months, including Warhammer: Dawn of War II, WWE Legends of WrestleMania, our first games based on the popular Ultimate Fighting Championship, and Red Faction: Guerrilla.”
Farrell added, “In this environment, we are focused on what we can control: delivering high quality products, investing in a targeted product pipeline, and aggressively managing costs.”
Business Realignment
During the fiscal third quarter, the company executed on its previously announced business realignment plan and reduced its fiscal 2010 forecasted annual spending by $120 million. As a result, the company recorded approximately $40.4 million in non-GAAP business realignment expenses in the third fiscal quarter, which included approximately $30.8 million in non-cash impairment charges related to the cancellation of titles and long-lived assets associated with studio closures, and $9.6 million in other costs, including severance and other employee-related costs, and lease and other contract termination costs.
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