THQ 2005 Annual Report Download - page 61

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38
PC Net Sales (in thousands)
Year Ended
March 31,2004% of net sales
Year Ended
March 31,2003% of net sales % change
(Unaudited)
$74,934 11.7 % $49,333 10.5% 51.9%
Net sales of our PC games increased in fiscal 2004 primarily due to strong sales of Disney/Pixar’sFinding
Nemo. Growth in net sales during fiscal 2004 was also due to strong sales of PC titles published by
ValuSoft, our value division. In total we released 52 PC SKUs published from our ValuSoft division and 16
other PC SKUs during fiscal 2004 compared to 51 PC SKUs published by our ValuSoft division and 11
other PC SKUs in the twelve months ended March 31, 2003.
Costs and Expenses, Interest Income, Other Income (Expenses) and Income Taxes
The following table sets forth information about our costs and expenses, interest income, other income
(expenses) and income taxes for the periods indicated as a percentage of total net sales:
Percent of Net Sales
Year Ended March 31,
2004 2003
(Unaudited)
Costs and expenses:
Cost of sales......................................... 35.8%38.1%
License amortization and royalties ..................... 11.1 8.3
Software development amortization .................... 16.5 18.2
Product development. ................................ 5.87.8
Selling and marketing ................................ 14.4 15.2
Payment to venture partner ........................... 1.52.0
General and administrative ........................... 7.37.9
Total costs and expenses................................ 92.4 97.5
Income from operations................................ 7.62.5
Interest income ........................................ 0.41.0
Other income (expense) ................................ 0.6(2.6)
Income before income taxes............................. 8.60.9
Income taxes .......................................... 3.00.4
Net income ........................................... 5.6% 0.5%
Costs and expenses for fiscal 2004 increased as compared to the twelve months ended March 31, 2003,
from $455.7million to $592.0 million;however, costs and expenses as a percent of net sales decreased from
98% to 92%. The only increase as a percentage of net sales in fiscal 2004 was higher license amortization
and royalty expense. A significant portion of this increase was attributable to global sales of Disney/Pixar’s
Finding Nemo, a licensed property.
Cost of Sales (in thousands)
Year Ended
March 31, 2004% of net sales
Year Ended
March 31, 2003% of net sales % change
(Unaudited)
$229,218 35.8 % $ 1 78,291 38.1% 28.6%
Cost of sales represented 36% and 38% of net sales for the twelve months ended March 31, 2004 and 2003,
respectively. The primary factors that decreased the cost of sales as a percentage of net sales for fiscal 2004