THQ Third Quarter Net Income Increases 70% to $0.21 Per Share On Record Revenue of $25,963,000
CALABASAS, Calif.--(BUSINESS WIRE)--Oct. 22, 1998--THQ Inc.
(Nasdaq/NM:THQI) Thursday announced that net income for the third
quarter ended Sept. 30, 1998 increased 70% to a record $2,426,000,
or $0.21 per diluted share, on 11,742,000 diluted common shares
outstanding.
This compares with net income of $1,428,000, or $0.13 per diluted
share, for the third quarter of 1997 on 10,729,000 diluted common
shares outstanding. Revenue increased 59% to a third-quarter record
$25,963,000 from $16,355,000 for the same period a year earlier.
For the nine months ended Sept. 30, 1998, net income (before a
one-time charge of $7,232,000 related to the acquisition of GameFx
Inc. on May 1, 1998) increased 276% to a record $11,801,000, or $1.03
per diluted share. Including the one-time charge, net income was
$4,569,000, or $0.40 per diluted share.
Net income for the first nine months of last year was $3,142,000,
or $0.31 per diluted share. Revenue for the first nine months of 1998
increased 156% to a record $103,742,000 from $40,459,000 for the same
period a year earlier.
President and Chief Executive Officer Brian Farrell noted that
the 1998 third quarter benefited from strong sales of the re-release
of "WCW vs NWO: World Tour" for the Nintendo 64, together with the
launch of "Devil Dice" and "G. Darius" for the PlayStation, "BASS
Masters Classic: Tournament Edition" and "Red Jack: Revenge of the
Brethren" for the PC platform, and "Brunswick Circuit Pro Bowling" for
the PC and PlayStation.
"Looking into the fourth quarter, we are particularly excited
about 'Rugrats: Search for Reptar' for the PlayStation, and by our
strong line of wrestling titles, notably the launch of 'WCW vs. NWO:
Revenge' for the Nintendo 64," Farrell said.
"Due to the stronger than anticipated retail demand for our
products, we currently expect that fourth quarter revenue and earnings
will meet or exceed last year's fourth quarter results, even after an
increase in the anticipated effective tax rate," he said. For the
fourth quarter of 1997, THQ reported net income of $6,203,000, or
$0.56 per diluted share, on revenue of $48,903,000.
THQ Inc. 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 and uncertainties detailed in the
company's filings with the Securities and Exchange Commission.
THQ Inc.
Third Quarter Earnings Announcement, 1998
Condensed Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Net sales $ 25,963 $ 16,355 $103,742 $ 40,459
Costs and expenses:
Cost of sales 11,220 8,906 45,195 22,651
Royalties 5,042 2,539 21,095 6,322
Product development 1,148 309 3,399 854
Selling 3,167 1,781 10,854 4,133
General and
administrative 1,967 1,180 6,762 3,206
In process research
and development(a) 0 0 7,232 0
Total costs and
expenses 22,544 14,715 94,537 37,166
Income (loss)
from operations 3,419 1,640 9,205 3,293
Interest income, net 255 198 724 329
Income (loss) before
income taxes 3,674 1,838 9,929 3,622
Provision for
income taxes 1,248 410 5,360 480
Net income (loss) $ 2,426 $ 1,428 $ 4,569 $ 3,142
Net income per
share - diluted $ 0.21 $ 0.13 $ 0.40 $ 0.31
Shares used in per
share calculation 11,742 10,729 11,479 10,068
Add back in process
research and
development(a) $ 0 $ 0 $ 7,232 $ 0
Net income before
in process research
and development $ 2,426 $ 1,428 $ 11,801 $ 3,142
Net income per share
before in process
research and development $ 0.21 $ 0.13 $ 1.03 $ 0.31
Shares used in per
share calculation 11,742 10,729 11,479 10,068
(a) In process research and development represents purchased
costs related to the acquisition of GameFx Inc., an applied technology
company focused on the development of interactive entertainment
software utilizing proprietary 3-D acceleration technology.
THQ Inc.
Third Quarter Earnings Announcement, 1998
Condensed Balance Sheets
(In thousands)
Sept. 30, Dec. 31,
1998 1997
ASSETS
Cash and cash equivalents $ 21,158 $ 11,724
Accounts receivable - net 10,243 30,856
Inventory 2,894 1,425
Prepaid and deferred royalties 15,284 3,645
Software development costs 5,523 6,044
Deferred income taxes 1,666 1,666
Prepaid income taxes 3,544 0
Prepaid expenses and other current assets 827 478
Total current assets 61,139 55,838
Property and equipment, net 1,390 1,163
Deferred royalties - net of current portion 0 500
Software development cost - net of current portion 0 1,300
Other long term assets 2,585 652
Total assets $ 65,114 $ 59,453
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 4,752 $ 10,952
Accrued royalties 14,173 9,949
Income taxes payable 0 3,475
Total current liabilities 18,925 24,376
Accrued royalties - net of current portion 0 1,550
Common stock 109 4
Additional paid-in capital 55,337 47,559
Cumulative foreign currency translation adjustment 326 81
Accumulated deficit (9,583) (14,117)
Total shareholders' equity 46,189 33,527
Total liabilities and chareholders' equity $ 65,114 $ 59,453
Other Information
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Platform Revenue Mix
Nintendo 64 43.0% 0.0% 45.3% 0.3%
PlayStation 44.7 19.9 43.6 29.6
PC 5.5 0.0 1.1 0.7
16 Bit 0.9 32.1 1.5 29.9
GameBoy 4.8 48.0 7.9 39.1
Other 1.1 0.0 0.6 0.4
100.0% 100.0% 100.0% 100.0%
Geographic Revenue Mix
Domestic 89.6% 95.3% 84.8% 82.1%
Foreign 10.4 4.7 15.2 17.9
100.0% 100.0% 100.0% 100.0%
CONTACT:
THQ/Investor Relations, Calabasas
Deborah Lake, 818/591-1310
dlake@thq.com
THQ/Media Relations, Calabasas
Aimee Greenholtz, 818/223-3116
aim@thq.com |
