UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2003
OR
o 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.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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13-3541686 |
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(State or Other Jurisdiction of |
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(I.R.S. Employer |
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27001 Agoura Road |
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91301 |
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(Address of principal executive offices) |
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(Zip Code) |
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Registrant’s telephone number, including area code: (818) 871-5000 |
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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 ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of February 6, 2004, there were 38,060,169 shares of common stock outstanding.
THQ INC. AND SUBSIDIARIES
INDEX
2
Part I – Financial Information
THQ
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
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December 31, |
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March 31, |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
183,019 |
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$ |
199,860 |
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Short-term investments |
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4,800 |
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16,151 |
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Cash, cash equivalents and short-term investments |
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187,819 |
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216,011 |
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Accounts receivable, net of allowances of $78,357 and $31,517, respectively |
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164,917 |
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35,976 |
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Inventory |
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29,377 |
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24,339 |
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Licenses |
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12,526 |
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15,330 |
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Software development |
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31,020 |
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54,824 |
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Income taxes receivable |
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— |
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1,116 |
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Prepaid expenses and other current assets |
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22,839 |
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11,316 |
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Total current assets |
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448,498 |
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358,912 |
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Property and equipment, net |
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16,895 |
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16,408 |
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Licenses, net of current portion |
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10,212 |
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20,053 |
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Software development, net of current portion |
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10,410 |
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2,640 |
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Deferred income taxes |
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8,254 |
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8,346 |
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Goodwill, net |
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60,909 |
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58,609 |
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Other long-term assets, net |
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14,704 |
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7,981 |
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TOTAL ASSETS |
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$ |
569,882 |
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$ |
472,949 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
37,300 |
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$ |
21,001 |
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Accrued expenses |
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26,949 |
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20,090 |
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Accrued payment to venture partner |
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6,056 |
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676 |
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Accrued royalties |
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47,433 |
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22,893 |
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Income taxes payable |
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12,278 |
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— |
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Deferred income taxes |
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7,133 |
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7,353 |
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Total current liabilities |
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137,149 |
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72,013 |
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Accrued royalties, net of current portion |
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2,650 |
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4,523 |
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Commitments and contingencies |
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— |
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— |
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Stockholders’ equity: |
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Preferred stock, par value $.01, 1,000,000 shares authorized |
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— |
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— |
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Common stock, par value $.01, 75,000,000 shares authorized;
38,026,425 and |
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380 |
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380 |
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Additional paid-in capital |
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302,545 |
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305,328 |
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Accumulated other comprehensive income |
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7,543 |
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1,496 |
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Retained earnings |
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119,615 |
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89,209 |
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Total stockholders’ equity |
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430,083 |
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396,413 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
569,882 |
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$ |
472,949 |
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See notes to consolidated financial statements.
3
THQ INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share data)
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For the Three Months Ended |
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For the Nine Months Ended |
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(Unaudited) |
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(Unaudited) |
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2003 |
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2002 |
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2003 |
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2002 |
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Net sales |
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$ |
293,099 |
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$ |
217,751 |
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$ |
517,711 |
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$ |
400,847 |
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Costs and expenses: |
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Cost of sales |
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98,347 |
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82,411 |
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181,589 |
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151,913 |
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License amortization and royalties |
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34,012 |
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18,298 |
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58,815 |
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33,412 |
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Software development amortization |
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46,595 |
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48,328 |
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88,866 |
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72,898 |
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Product development |
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9,277 |
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10,588 |
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27,436 |
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27,632 |
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Selling and marketing |
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35,014 |
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31,426 |
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74,638 |
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56,684 |
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Payment to venture partner |
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6,257 |
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6,030 |
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8,817 |
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8,574 |
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General and administrative |
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16,592 |
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11,769 |
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35,634 |
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28,352 |
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Total costs and expenses |
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246,094 |
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208,850 |
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475,795 |
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379,465 |
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Income from operations |
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47,005 |
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8,901 |
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41,916 |
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