THQ 2009 Annual Report Download - page 44

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The following table details our net sales by territory for fiscal 2009 and fiscal 2008 (in thousands):
Fiscal Year Ended March 31, Increase/
2009 2008 (Decrease) % Change
North America ............ $457,819 55.2% $ 503,134 48.8% $ (45,315) (9.0)%
Europe .................. 314,063 37.8% 454,880 44.2% (140,817) (31.0)%
Asia Pacific ............... 58,081 7.0% 72,453 7.0% (14,372) (19.8)%
International .............. 372,144 44.8% 527,333 51.2% (155,189) (29.4)%
Consolidated net sales ....... $829,963 100.0% $1,030,467 100.0% $(200,504) (19.5)%
Net sales in North America and in our international territories decreased in fiscal 2009 as compared to
fiscal 2008 by $45.3 million and $155.2 million, respectively. The decrease in net sales in both North
America and in our international territories was primarily due to the decrease in sales from our new
releases. Additionally, we estimate that unfavorable changes in foreign currency translation rates during
fiscal 2009 resulted in a decrease of reported net sales from our international territories of $41.0 million as
compared to fiscal 2008.
Costs and Expenses, Interest and Other Income, Income Taxes and Minority Interest
Excluding the impact of goodwill impairment charges of $118.8 million, costs and expenses decreased by
$19.6 million, or 1.8%, in fiscal 2009 as compared to fiscal 2008, to $1,098.9 million, from $1,118.5 million.
The decrease was primarily due to decreases in product costs, license amortization and royalties, product
development, and selling and marketing expense in fiscal 2009 as compared to fiscal 2008, which were
primarily the result of lower sales and cost reductions in product development stemming from our business
realignment. These decreases were partially offset by an increase in software development expense in
fiscal 2009 as compared to fiscal 2008, primarily due to games cancelled in connection with our
realignment as well as other realignment charges incurred in fiscal 2009.
Cost of Sales—Product Costs (in thousands)
Year Ended Year Ended
March 31, 2009 % of net sales March 31, 2008 % of net sales % change
$338,882 40.8% $389,097 37.8% 12.9%
Product costs primarily consist of direct manufacturing costs (including platform manufacturer license
fees), net of manufacturer volume rebates and discounts. Product costs as a percentage of net sales
increased by 3.0 points in fiscal 2009 as compared to fiscal 2008. This increase was primarily due to:
• a shift in title mix on the Wii platform toward lower priced titles such as Big Beach Sports and All
Star Cheer, and
• a decrease in the average selling price on Smackdown vs. Raw 2009 in fiscal 2009 as compared to
Smackdown vs. Raw 2008 in fiscal 2008, as well as a decrease in average selling price on Wall-E in
fiscal 2009 as compared to Ratatouille in fiscal 2008. The decrease in average selling price on these
titles was due to a decrease in the gross selling price as well as a higher percentage of fiscal 2009
estimates for price protection as compared to fiscal 2008.
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