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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 0-18813

THQ INC.

Delaware (State or Other Jurisdiction of Incorporation or Organization)		13-3541686 (I.R.S. Employer Identification No.)
27001 Agoura Road Calabasas Hills, CA (Address of principal executive offices)		91301 (Zip Code)

Registrant’s telephone number, including area code: (818) 871-5000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [   ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $0.01 par value: 39,646,526 shares (as of August 9, 2002).

Table of Contents

THQ INC. AND SUBSIDIARIES

INDEX

						PAGE
Part I — Financial Information
Item 1.				Consolidated Financial Statements:
				Consolidated Balance Sheets — June 30, 2002 and December 31, 2001			3
				Consolidated Statements of Operations — for the Three Months and Six Months Ended June 30, 2002 and 2001			4
				Consolidated Statements of Stockholders’ Equity — for the Year Ended December 31, 2001 and the Six Months Ended June 30, 2002			5
				Consolidated Statements of Cash Flows — for the Six Months June 30, 2002 and 2001			6
				Notes to Consolidated Financial Statements			7
Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3.				Quantitative and Qualitative Disclosures About Market Risk			23
Part II — Other Information
Item 1.				Legal Proceedings			24
Item 2.				Changes in Securities and Use of Proceeds			25
Item 4.				Submission of Matters to a Vote of Security Holders			26
Item 6.				Exhibits and Reports on Form 8-K			27
Signatures							28

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Part I — Financial Information

Item 1. Financial Statements.

THQ INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

				June 30,				December 31,
				2002				2001
				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	172,742			$	171,059
	Short-term investments				55,878				35,106
		Cash, cash equivalents and short-term investments			228,620				206,165
	Accounts receivable — net				64,455				126,011
	Inventory				14,288				9,917
	Licenses				17,692				16,758
	Software development				49,012				34,664
	Income taxes receivable				852				290
	Prepaid expenses and other current assets				4,651				7,498
		Total current assets			379,570				401,303
Property and equipment — net					14,984				13,891
Licenses — net of current portion					31,148				8,345
Software development — net of current portion					2,843				4,466
Goodwill — net					48,247				48,202
Other long-term assets — net					8,158				11,759
TOTAL ASSETS				$	484,950			$	487,966
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	13,675			$	27,186
	Accrued expenses				17,328				22,944
	Accrued royalties				21,294				30,001
	Deferred income taxes				1,566				1,567
		Total current liabilities			53,863				81,698
Accrued royalties — net of current portion					14,925				6,686
Deferred income taxes					1,130				720
Commitments and contingencies					—				—
Stockholders’ equity:
Common stock, par value $.01, 75,000,000 shares authorized; 39,474,536 and 38,979,747 shares issued and outstanding as of June 30, 2002 and December 31, 2001, respectively					395				390
Additional paid-in capital					326,166				316,758
Accumulated other comprehensive loss					(485	)			(2,187	)
Retained earnings					88,956				83,901
		Total Stockholders’ equity			415,032				398,862
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	484,950			$	487,966

See notes to consolidated financial statements.

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THQ INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

			For the Three Months Ended								For the Six Months Ended
			June 30,								June 30,
			2002				2001				2002				2001
			(Unaudited)								(Unaudited)
Net sales			$	85,762			$	55,236			$	165,443			$	114,564
Costs and expenses:
	Cost of sales			32,497				23,558				66,176				51,883
	License amortization and royalties			7,099				4,507				14,163				9,261
	Software development amortization			11,587				3,580				22,388				9,050
	Product development			9,019				4,849				16,665				9,958
	Selling and marketing			11,424				7,947				21,182				15,611
	Payment to venture partner			1,500				339				3,072				1,763
	General and administrative			6,340				5,511				12,400				11,462
Total costs and expenses				79,466				50,291				156,046				108,988
Income from operations				6,296				4,945				9,397				5,576
Interest income, net				1,579				595				2,901				1,307
Other expenses				(3,006	)			—				(3,006	)			—
Income before income taxes				4,869				5,540				9,292				6,883
Income taxes				2,578				2,086				4,237				2,568
Net income			$	2,291			$	3,454			$	5,055			$	4,315
Net income per share — basic			$	.06			$	.11			$	.13			$	.14
Net income per share — diluted			$	.05			$	.10			$	.12			$	.13
Shares used in per share calculation — basic				39,392				32,028				39,231				31,448
Shares used in per share calculation — diluted				42,052				35,005				41,891				34,310

See notes to consolidated financial statements.

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THQ INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except per share data)

				For the Year Ended December 31, 2001 and the Six Months Ended June 30, 2002 (Unaudited)
																Accumulated
												Additional				Other
				Common				Common				Paid-in				Comprehensive				Retained
				Shares				Stock				Capital				Loss				Earnings				Total
Balance at January 1, 2001					30,690,807			$	307			$	85,645			$	(1,715	)		$	47,888			$	132,125
Exercise of warrants and options					2,405,413				24				16,697				—				—				16,721
Issuance of common stock from secondary offering					4,596,222				46				154,559				—				—				154,605
Issuance of common stock for Rainbow acquisition					1,287,305				13				48,635				—				—				48,648
Stock compensation					—				—				299				—				—				299
Tax benefit related to the exercise of employee stock options					—				—				10,923				—				—				10,923
Comprehensive income:
	Net income				—				—				—				—				36,013				36,013
	Other comprehensive income
		Foreign currency translation adjustment			—				—				—				(703	)			—				(703	)
		Unrealized gain on investments			—				—				—				231				—				231
Comprehensive income																									35,541
Balance at December 31, 2001					38,979,747				390				316,758				(2,187	)			83,901				398,862
Exercise of warrants and options					494,789				5				5,058				—				—				5,063
Adjustments related to secondary offering					—				—				52				—				—				52
Adjustments related to Rainbow acquisition					—				—				(82	)			—				—				(82	)
Issuance of warrants					—				—				1,213				—				—				1,213
Stock compensation					—				—				101				—				—				101
Tax benefit related to the exercise of employee stock options					—				—				3,066				—				—				3,066
Comprehensive income:
	Net income				—				—				—				—				5,055				5,055
	Other comprehensive income
		Foreign currency translation adjustment			—				—				—				2,143				—				2,143
		Unrealized loss on investments			—				—				—				(441	)			—				(441	)
Comprehensive income																									6,757
Balance at June 30, 2002					39,474,536			$	395			$	326,166			$	(485	)		$	88,956			$	415,032

See notes to consolidated financial statements.

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THQ INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

			For the Six Months Ended
			June 30,
			2002				2001
			(Unaudited)
Cash flows from operating activities:			&nbs