Earnings release!
THQ First-Quarter 1998 Net Income Leaps 802 Percent on 309
Percent Revenue Gain; Earnings Per Share Jump to 86 Cents
From 12 Cents
CALABASAS, Calif.--(BUSINESS WIRE)--April 21, 1998--THQ Inc.
(Nasdaq:THQI) Tuesday reported that net sales for the first quarter of 1998
were $48,453,000, a 309 percent increase over the $11,839,000 reported for
the first quarter of 1997.
Net income for the quarter rose nine-fold to $6,492,000, or 86 cents per
diluted share, on 7,542,000 shares. This compares with net income of
$720,000, or 12 cents per diluted share, on 6,041,000 shares, for the first
quarter of 1997.
The increase in both net sales and net income for the first quarter is largely
attributable to the release of three new PlayStation titles: "WCW Nitro," the
combat driving title "Ray Tracers," and the graphic adventure "Broken Sword:
Shadow of the Templars."
Additionally, revenues for the first quarter were boosted by the international
release of "WCW vs. NWO: World Tour" for the Nintendo 64, as well as
continued domestic re-orders of this title. Including revenues generated from
"WCW vs. the World" under the PlayStation's Greatest Hits program, sales of
WCW-related products accounted for 88 percent of THQ's revenues in the
first quarter of 1998.
THQ noted that revenue from products for the PlayStation and Nintendo 64
platforms contributed 92 percent of net sales in the first quarter of 1998, up
from 20 percent in the first quarter of 1997.
"The success of our WCW titles exceeded our expectations in the first
quarter," said Brian J. Farrell, president and CEO, THQ.
"There are a number of high-profile titles in our plans that we are very excited
about for the balance of 1998. We are particularly enthusiastic about 'Quest
64' for the Nintendo 64 and 'The Granstream Saga' for the PlayStation, which
are scheduled for the second quarter, and 'Rugrats' for the PlayStation and
GameBoy, which we plan to launch simultaneously in the fall with the release of
the feature film."
THQ announced on Monday that it has signed a definitive agreement to
acquire GameFX Inc., an applied technology company focused on the
development of interactive entertainment software utilizing proprietary 3-D
acceleration technology. "3-D acceleration will play a significant part in the
future of games. This acquisition fills a strategic need for THQ," said Farrell.
THQ is a leading developer, publisher and distributor of interactive
entertainment software worldwide for a variety of hardware platforms,
including PC CD-ROM and those manufactured by Nintendo and Sony. The
THQ Web site is located at www.thq.com.
The statements contained in this release, which are not historical facts, may be
deemed to constitute forward-looking statements. Actual results may differ
materially from those projected in such statements due to a number of risks
and uncertainties, including, without limitation, demand and competition for the
company's products, and other risks or uncertainties detailed in the company's
filings with the Securities and Exchange Commission.
THQ INC.
First-Quarter Earnings Announcement, 1998
Condensed Statements of Operations
(In thousands, except per-share data)
Three months ended
March 31,
1998 1997
Net sales $ 48,453 $ 11,839
Costs and expenses:
Cost of sales 20,363 7,242
Royalties 11,131 1,693
Product development 730 224
Selling 3,912 1,057
General and administrative 2,955 929
Total costs and expenses 39,091 11,145
Income from operations 9,362 694
Interest income, net 158 30
Income before income taxes 9,520 724
Provision for income taxes 3,028 4
Net income $ 6,492 $ 720
Net income per share -- diluted $ 0.86 $ 0.12
Shares used in per-share calculation 7,542 6,041
Condensed Balance Sheets
(In thousands)
March 31, Dec. 31,
1998 1997
Assets:
Cash and cash equivalents $ 21,936 $ 11,724
Accounts receivable -- net 25,617 30,856
Inventory 2,079 1,425
Prepaid and deferred royalties 5,292 3,645
Software development costs 8,902 6,044
Deferred income taxes 1,666 1,666
Prepaid expenses and other
current assets 372 478
Total current assets 65,864 55,838
Property and equipment, net 1,245 1,163
Deferred royalties
-- net of current portion 0 500
Software development cost
-- net of current portion 0 1,300
Other long-term assets 606 652
Total assets $ 67,715 $ 59,453
Liabilities and Shareholders' Equity:
Accounts payable and accrued
expenses $ 6,857 $ 10,952
Accrued royalties 17,482 9,949
Income taxes payable 2,972 3,475
Total current liabilities 27,311 24,376
Accrued royalties -- net of current
portion 0 1,550
Common stock 69 4
Additional paid-in capital 47,806 47,559
Cumulative foreign currency
translation adjustment 154 81
Accumulated deficit (7,625) (14,117)
Total shareholders' equity 40,404 33,527
Total liabilities and shareholders'
equity $ 67,715 $ 59,453
Other Information
Three Months Ended
March 31,
1998 1997
Platform Revenue Mix:
Nintendo 64 38.1 % 0.0 %
PlayStation 54.0 19.6
PC 0.2 0.2
16 Bit 3.4 50.4
GameBoy 4.3 29.8
100 % 100 %
Geographic Revenue Mix:
Domestic 87.1 % 59.7 %
Foreign 12.9 40.3
100 % 100 %
CONTACT: THQ Inc., Calabasas
Deborah Lake, 818/591-1310 (investors)
dlake@thq.com
Aimee Greenholtz, 818/223-3116 (media)
agreenholtz@thq.com
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