THQ 2010 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... and project management processes delivered consistent high quality titles: Our average Metacritic quality scores in fiscal 2010 increased to 82 from 80 in fiscal 2009 and 72 in fiscal 2008. We strengthened our balance sheet, ending the year with cash, cash equivalents and short-term investments...

  • Page 3
    ... class internal Studio System is supporting THQ's Core Games efforts. In December, we announced plans to open a new development We are also pleased to have settled the litigation with World Wrestling Entertainment® (WWE®) and JAKKS Pacific, resulting in a new direct eightyear agreement with WWE...

  • Page 4
    ... nearly 4 million units of WWE® SmackDown® vs. Raw® 2010. For fiscal 2011, we plan to build on this popular video game franchise with WWE SmackDown vs. Raw 2011 this fall. We also plan to launch a brand extension, WWE® All Stars™, and to go live with WWE SmackDown vs. Raw Online in Korea later...

  • Page 5
    ...our key franchises using business models such as freeto-play micro-transactions, paid downloadable content and full scale MMO's. During fiscal 2011, we plan to launch two free-to-play microtransaction-based games: Company of Heroes® Online in Korea and North America and WWE SmackDown vs. Raw Online...

  • Page 6
    ... products that resonate with our target markets. In closing, THQ delivered on all of our financial and strategic goals resulting in a strong turnaround in fiscal 2010. Moving forward, we remain focused on increasing stockholder value by growing our pipeline of both owned and licensed franchises...

  • Page 7
    ...which the common equity was last sold, as of the last business day of the registrant's most recently completed second fiscal quarter, September 26, 2009 was approximately $478.0 million. The number of shares outstanding of the registrant's common stock as of May 28, 2010 was approximately 67,746,675...

  • Page 8
    ... Beneficial Owners and Management and Related Stockholder Matters...Certain Relationships and Related Transactions, and Director Independence...Principal Accounting Fees and Services ...P ar t I V 78 78 78 79 79 Item 15. Exhibits, Consolidated Financial Statement Schedules...SIGNATURES ... 79...

  • Page 9
    ... developer and publisher of interactive entertainment software for all popular game systems, including home video game consoles such as the Microsoft Xbox 360 ("Xbox 360"), Nintendo Wii ("Wii"), Sony PlayStation 3 ("PS3") and Sony PlayStation 2 ("PS2"); handheld platforms such as the Nintendo DS...

  • Page 10
    ... Publishing unit, which operates in three regions-North America, Europe and Asia Pacific-and is responsible for global distribution and sales of our products. Core Games Our Core Games group oversees the production and marketing of action, fighting, racing, shooter and strategy games primarily...

  • Page 11
    ... play on console platforms, handheld platforms, mobile devices, PCs and online. The following games generated 10% or more of our net sales during the respective fiscal years in fiscal 2010, UFC 2009 Undisputed and WWE SmackDown vs. Raw 2010 ; in fiscal 2009, WWE SmackDown vs. Raw 2009 , Saints Row...

  • Page 12
    ... s We develop our products using both internal and external development resources. The internal resources consist of producers, game designers, software engineers, artists, animators and game testers located within our internal studios located throughout North America, in the United Kingdom and...

  • Page 13
    ... during regular business hours. The customer support group tracks customer inquiries, and we use this data to help improve the development and production processes. Manufac turing Our Produc t s Other than games we release for sale on PCs, digital download, or wireless devices, our video games are...

  • Page 14
    ... group of business, consumer, entertainment and games enthusiast reporters across the globe, working closely to secure positive editorial coverage across broadcast, print and online editorial outlets. Dis tributing and Selling Our Produc t s In North America, our products are primarily sold directly...

  • Page 15
    ... platform manufacturer in order to publish our games on such platform. We are currently licensed to publish, in most countries throughout the world, titles on Xbox 360; PS3, PS2, and PSP; and the Wii and DS. Additionally, we are authorized to develop and publish online content compatible with each...

  • Page 16
    ...and Results of Operations" and "Note 22-Segment and Geographic Information" in the notes to the consolidated financial statements included in Part II-Item 8. A vailable In formation We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange...

  • Page 17
    We must continue to develop and sell new ti tles in order to generate net sales and remain profitable. We derive almost all of our net sales from sales of interactive software games. Even the most successful video games remain popular for only limited periods of time, often less than six months, and...

  • Page 18
    ...31, 2010, from $140.7 million as of March 31, 2009. However, we operate in a capital intensive business and intend to invest in product development and licenses in fiscal 2011 and thus do not expect to generate positive cash flow from operations in fiscal 2011. Although we believe that our financial...

  • Page 19
    ... an adverse impact on our future foreign sales or the profits generated from those sales. There are additional risks inherent in doing business in certain international markets, such as China. For example, foreign exchange controls may prevent us from expatriating cash earned in China, and standard...

  • Page 20
    ... of our net sales from the sale of products for play on video game platforms manufactured by third parties, such as PS3 and PSP, Xbox 360, and the Wii and DS. The following factors related to such platforms can adversely impact sales of our video games and our profitability: Popularity of platforms...

  • Page 21
    ... results. Soft ware pricing and sales allowances may impac t our net sales and profi tability . Software prices for games sold for play on the PS3 and Xbox 360 are generally higher than prices for games for the Wii, handheld platforms or PC games. Our product mix in any given fiscal quarter...

  • Page 22
    ... in fiscal 2009, Disney decided to internally develop video games based upon its upcoming movie Toy Story 3 rather than granting the license to develop and publish the game to an external publisher such as us. This may impact our net sales in fiscal 2011, as we are not releasing a new Disney•Pixar...

  • Page 23
    ... may negatively impac t our business . Software piracy is increasing rapidly in the video game industry. Piracy related to customers obtaining products through peer-to-peer networks and other Internet channels has increased substantially. Modified chips for the Xbox 360 and Wii systems have allowed...

  • Page 24
    ... at 29903 Agoura Road, Agoura Hills, California. Including this office, the following is a summary of the square footage of the principal leased offices we maintained as of March 31, 2010: Purpose North America Europe A sia Pacific T otal Sales and administrative...Product development ...Total...

  • Page 25
    ... our common stock. We currently intend to retain future earnings, if any, to finance the growth and development of our business and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our Loan and Security Agreement with Bank of America, N.A. restricts...

  • Page 26
    ...the five-year period ended March 31, 2010 are derived from our audited consolidated financial statements. The consolidated balance sheets as of March 31, 2010 and 2009, and the consolidated statements of operations for fiscal 2010, 2009 and 2008, and the report thereon are included elsewhere in this...

  • Page 27
    ... 65,520 Net sales ...Cost of sales: Product costs...Software amortization and royalties ...License amortization and royalties...Venture partner expense ...Total cost of sales ...Gross Profit...Operating expenses: Product development ...Selling and marketing ...General and administrative...Goodwill...

  • Page 28
    ... fiscal 2009 and lower costs in fiscal 2010 due to our fiscal 2009 business realignment. Our principal source of cash is from sales of interactive software games designed for play on video game consoles, handheld devices and PCs, including via the Internet. Our principal uses of cash are for product...

  • Page 29
    ... of our Online Games business unit is to embrace digital migration and extend our brands into online markets. During fiscal 2010, we developed games to bring online in fiscal 2011, including Company of Heroes Online for Korean and North American markets and a WWE online game for release initially in...

  • Page 30
    ...year, according to IDG. We expect North America and Europe retail software sales to be roughly flat in calendar 2010 versus 2009. We expect growth in our business during fiscal 2010 from sales of video games on the growing installed base of the PS3 and Xbox 360 platforms, which generally have higher...

  • Page 31
    ..., 2009 on Xbox 360 and PS3, at a premium price ( e.g. MSRP of $59.99 in the United States). This title was the primary driver of our net sales in fiscal 2010 and had a higher average selling price compared to sales of our titles released in fiscal 2009. The increase in net sales of new releases due...

  • Page 32
    ... sales in fiscal 2010 was primarily due to sales of UFC 2009 Undisputed on Xbox 360 and PS3, at a premium price ( e.g. MSRP of $59.99 in the United States). This title was the primary driver of our net sales in fiscal 2010 and had a higher average selling price compared to titles released in fiscal...

  • Page 33
    ...to decreases in internal development spending primarily resulting from actions taken as part of our fiscal 2009 business realignment, including our more focused product strategy and the closure of several of our studios. Selling and Marketing (in thousands) Year Ended March 31, 2010 % of net s ales...

  • Page 34
    .... During fiscal 2009, we updated our strategic plan in an effort to increase our profitability and cash flow generation. We significantly realigned our business to focus on fewer, higher quality games, and have established an operating structure that supports our more focused product strategy. The...

  • Page 35
    ... and other current assets in our consolidated balance sheets. Net sales decreased by $200.5 million in fiscal 2009 as compared to fiscal 2008, from $1,030.5 million to $830.0 million. Worldwide net sales in fiscal 2009 were primarily driven by sales of WWE SmackDown vs. Raw 2009, Saints Row 2, and...

  • Page 36
    ...decrease in units sold was also the result of fewer units sold of WWE Smackdown vs. Raw 2009 and Wall-E in fiscal 2009 compared to sales of WWE Smackdown vs. Raw 2008 and Ratatouille in fiscal 2008. Additionally, there was a decrease in the average selling price on our new releases in fiscal 2009 as...

  • Page 37
    ... of current revenues to total projected revenues. In fiscal 2009 software amortization and royalties increased by 13.2 points as a percentage of net sales as compared to fiscal 2008. The increase was primarily due to non-cash charges of $63.3 million incurred in fiscal 2009 related to games that...

  • Page 38
    ...Smackdown vs. Raw 2008 in fiscal 2008 and high marketing spend in the fourth quarter of fiscal 2008 due to the launch of our owned intellectual property Frontlines: Fuel of War . In fiscal 2009, selling and marketing expenses increased by 2.5 points as a percentage of net sales as compared to fiscal...

  • Page 39
    ... of liquidity are cash, cash equivalents, and short-term investments. Our principal source of cash is from sales of interactive software games designed for play on video game consoles, handheld devices and PCs, including via the Internet. Our principal uses of cash are for product purchases of discs...

  • Page 40
    ... financial statements included in Item 8. In order to position the company for long-term growth, during fiscal 2011 we intend to use $75.0 to $100.0 million of our cash, cash equivalents and short-term investments, principally to fund additional product development and invest in additional licenses...

  • Page 41
    ... long-term portion, decreased by $3.5 million, from $162.5 million at March 31, 2009 to $159.0 million at March 31, 2010. Approximately 82% of the software development asset balance at March 31, 2010 is for games that have expected release dates in fiscal 2011 and beyond. Total current liabilities...

  • Page 42
    ...,493 10,043 - 4,000 27,368 8,850 100,000 - 119,427 11,560 - - 35,060 $70,784 $113,249 $21,235 $464,392 (1) Licenses and Software Development. We enter into contractual arrangements with third parties for the rights to exploit intellectual property and for the development of products. Under these 34

  • Page 43
    ...As a result, we bear a risk that the properties upon which the titles of our games are based, or that the information and technology licensed from others and incorporated into the products, may infringe the rights of third parties. Our agreements with our third-party software developers and property...

  • Page 44
    ... sales of packaged software for video game systems and PCs and sales of content and services over the Internet and for wireless devices. Product sales are recognized net of allowances for price protection and returns and various customer discounts. We typically only allow returns for our PC products...

  • Page 45
    ... based on the ratio of current gross sales to total projected gross sales. In fiscal 2010, we recorded $10.8 million of additional amortization expense related to the cancellation of certain games. As of March 31, 2010, the net carrying value of our software development was $159.0 million. The...

  • Page 46
    ... net sales for packaged software when title and risk of loss transfers to the customer, provided that we have no significant remaining support obligations and that collection of the resulting receivable is deemed probable by management. Certain products are sold to customers with a street date (the...

  • Page 47
    ...2009, or January 1, 2010 for companies reporting earnings on a calendar-year basis, which will be our fiscal year 2011. Our adoption of this pronouncement on April 1, 2010 did not have a material impact on our results of operations, financial position or cash flows. In December 2009, the FASB issued...

  • Page 48
    ... interim and annual reporting periods beginning after December 15, 2009, which was our quarter ending March 31, 2010. Our adoption of this pronouncement did not have a material impact on our results of operations, financial position or cash flows. Disclosures about purchases, sales, issuances, and...

  • Page 49
    ..., related to cash flow hedging activities, in the notional amount of $29.2 million. These contracts were settled during fiscal 2010 and resulted in a loss of $0.7 million, which is included in interest and other income (expense), net in our consolidated statements of operations. Balance Sheet...

  • Page 50
    ...the Board of Directors and Stockholders of THQ Inc., Agoura Hills, California We have audited the accompanying consolidated balance sheets of THQ Inc. and subsidiaries (the "Company") as of April 3, 2010 and March 28, 2009, and the related consolidated statements of operations, total equity and cash...

  • Page 51
    ... share data) March 31, 2010 March 31, 2009 ASSETS Current assets: Cash and cash equivalents ...Short-term investments ...Cash, cash equivalents and short-term investments ...Short-term investments, pledged ...Accounts receivable, net of allowances ...Inventory ...Licenses ...Software development...

  • Page 52
    ... ON S (In thousands, e x cept per share data) Fi s c al Year Ended March 31, 2010 2009 2008 Net sales ...$899,137 $829,963 $1,030,467 Cost of sales: Product costs...318,590 338,882 389,097 Software amortization and royalties ...196,956 296,688 231,800 License amortization and royalties ...95,972 83...

  • Page 53
    ......Comprehensive income (loss) ...Balance at March 31 , 2008 ...Exercise of options ...Issuance of ESPP shares ...Conversion of stock unit awards...Cancellation of restricted stock...Stock-based compensation...Taxes related to the exercise and cancellation of employee stock options ...Noncontrolling...

  • Page 54
    ... net of allowances...Inventory...Licenses ...Software development ...Prepaid expenses and other current assets...Accounts payable...Accrued and other liabilities ...Income taxes ...Net cash provided by (used in) operating activities ...INVEST ING ACTIV I T IES : Proceeds from sales and maturities of...

  • Page 55
    ... developer and publisher of interactive entertainment software for all popular game systems, including home video game consoles such as the Microsoft Xbox 360 ("Xbox 360"), Nintendo Wii ("Wii"), Sony PlayStation 3 ("PS3") and Sony PlayStation 2 ("PS2"); handheld platforms such as the Nintendo DS...

  • Page 56
    ... the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates relate to accounts receivable allowances, licenses, software development, revenue recognition, stock...

  • Page 57
    ... sales of packaged software for video game systems and PCs and sales of content and services over the Internet and for wireless devices. Product sales are recognized net of allowances for price protection and returns and various customer discounts. We typically only allow returns for our PC products...

  • Page 58
    ... at the higher of (i) the contractual royalty rate based on actual net product sales related to such license, or (ii) an effective rate based upon total projected net sales related to such license. When, in management's estimate, future cash flows will not be sufficient to recover previously...

  • Page 59
    ... sales for packaged software when title and risk of loss transfers to the customer, provided that no significant vendor support obligations remain outstanding and that collection of the resulting receivable is deemed probable by management. Certain products are sold to customers with a street date...

  • Page 60
    ...the financial statements for our fiscal quarter ended December 31, 2008, we performed an interim goodwill impairment test. We performed the first step of the two-step impairment test, which includes comparing the fair value of our single reporting unit to its carrying value. Due to market conditions...

  • Page 61
    ... identifiable intangible assets, other than licenses and software development, were fully amortized. Stock-based compensation. We estimate the fair value of stock options and our employee stock purchase plan on date of grant using the Black-Scholes option pricing model which requires the input of...

  • Page 62
    ...2009, or January 1, 2010 for companies reporting earnings on a calendar-year basis, which will be our fiscal year 2011. Our adoption of this pronouncement on April 1, 2010 did not have a material impact on our results of operations, financial position or cash flows. In December 2009, the FASB issued...

  • Page 63
    ...these trading securities in fiscal 2010. As of March 31, 2009 there were no trading securities classified as cash equivalents. 3. In ves tment Se curities The following table summarizes our investment securities and their related inception-to-date gross unrealized gains and (losses), as of March 31...

  • Page 64
    ... bond insurance companies. Available-for-sale investments Our entire portfolio of available-for-sale investments had a fair value of $84.8 million at March 31, 2010, and inception-to-date net unrealized gains of $3,000 that are recorded in accumulated other comprehensive income (loss). Included in...

  • Page 65
    ... and is recorded in short-term investments, pledged in our March 31, 2010 consolidated balance sheet along with the underlying ARS which have a fair value of $21.0 million. In fiscal 2010, the put option had a decline in value of $2.8 million which is recorded as a loss in interest and other income...

  • Page 66
    ... outstanding under the UBS Agreement. 4. Fair Value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use...

  • Page 67
    ... value of these ARS using a discounted cash flow analysis that considered the following key inputs: i) credit quality, ii) estimates on the probability of the issue being called or sold prior to final maturity, iii) current market rates, and iv) estimates of the next time the security is expected...

  • Page 68
    ...contracts were settled during fiscal 2010 and resulted in a loss of $0.7 million, which is included in interest and other income (expense), net in our consolidated statements of operations. There were no such cash flow hedge activities during fiscal 2009. Balance Sheet Hedging Activities. We utilize...

  • Page 69
    ...-op advertising ...Allowance for doubtful accounts and other ...Total...Year ended March 31, 2008 Allowance for price protection and returns...Allowance for co-op advertising ...Allowance for doubtful accounts and other ...Total...6. Balance Sheet De tails $75,312 $139,121 $(145,307) 13,327 28,758...

  • Page 70
    ... value of the consideration payable under the agreement between THQ and Jakks, as explained further in "Note 17- Settlement Agreements." Accrued venture partner expense consisted of the preferred payments owed to Jakks for WWE video games sold under a license granted by World Wrestling Entertainment...

  • Page 71
    ... During fiscal 2009, we updated our strategic plan in an effort to increase our profitability and cash flow generation. We significantly realigned our business to focus on fewer, higher quality games, and have established an operating structure that supports our more focused product strategy. The...

  • Page 72
    ... of sales-license amortization and royalties, related to impairment of licenses in connection with the cancelled games; and cash charges of $12.7 million related to severance and other employee benefits. Employee related severance costs are classified in product development, selling and marketing...

  • Page 73
    ... interest rate, including amortization of debt issuance costs, for fiscal 2010 was 5.35%. In fiscal 2010 we paid $2.7 million in interest on the Notes. 12. Credit Fa cilit y On June 30, 2009, we entered into a Loan and Security Agreement (the "Credit Facility") with Bank of America, N.A. ("B of...

  • Page 74
    ... net income (loss) attributable to THQ Inc. divided by the weighted-average number of shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans including stock options, stock-based...

  • Page 75
    ... for fiscal 2010, 2009 and 2008, an additional 0.3 million, 0.7 million and 1.8 million shares of common stock, respectively, would have been included in the number of shares used to calculate diluted earnings per share. 16. E mployee De fined Contribution P lan For our United States employees we...

  • Page 76
    ... against Brian Farrell) as more fully specified in the WWE Settlement Agreement. The settlement agreement contained a provision stating that it would not become effective unless and until, prior to December 31, 2009, (a) THQ and WWE entered into a new license agreement for WWE video games, (b) WWE...

  • Page 77
    ... shares subject to each award will vest on each of the first through fourth anniversaries of the grant date if certain performance targets for the Company are attained each fiscal year. PARSUs granted to our non-employee directors under the 1997 Plan are currently fully vested. Deferred Stock Units...

  • Page 78
    .... For fiscal 2010, 2009 and 2008, stock-based compensation expense recognized in the consolidated statements of operations was as follows (in thousands): Year Ended March 31, 2010 2009 2008 Cost of sales-software amortization and royalties...Product development ...Selling and marketing ...General...

  • Page 79
    ...year A summary of our stock option activity for fiscal 2010, 2009 and 2008 is as follows (in thousands, except per share amounts): WeightedA verage Remaining Contrac tual T erm (in years) Options WeightedA verage E xercise Price Aggregate Intrinsic Value Outstanding at March 31, 2007 ...Granted...

  • Page 80
    ... with the acquisition of licensing rights for certain key intellectual property. The warrants vested upon grant and are exercisable over the term of the warrant. The exercise price of third-party stock warrants is equal to the fair market value of our common stock at the date of grant. No third...

  • Page 81
    ... the related product is released and the related net sales are recognized. In fiscal 2010, 2009 and 2008, we incurred amortization expense of $0.1 million, $0.4 million, and $0.5 million, respectively, related to these warrants. Additionally, the recoverability of intellectual property licenses is...

  • Page 82
    ...of the Internal Revenue Code, as amended. In order to discourage such an "ownership change" and protect our net operating loss carryforwards, on May 12, 2010, we entered into a Section 382 Rights Agreement (for further information see "Note 20-Stockholders Rights Plan"). The tax credit carryforwards...

  • Page 83
    ... interest related to uncertain tax positions. These amounts, if any, are included in other long-term liabilities in the consolidated balance sheets. 20. S to c kholders Rights P lan As of March 31, 2010, THQ's stockholders held their stock subject to an Amended and Restated Rights Agreement dated...

  • Page 84
    ... price, the number of shares of common stock having a current market value equal to two times the exercise price of the Right. Pursuant to the Second Amendment to the Amended and Restated Rights Agreement, dated May 12, 2010, the Rights expired on May 12, 2010 and on the same date, the Company...

  • Page 85
    ...As a result, we bear a risk that the properties upon which the titles of our games are based, or that the information and technology licensed from others and incorporated into the products, may infringe the rights of third parties. Our agreements with our third-party software developers and property...

  • Page 86
    ...are a developer, publisher and distributor of interactive entertainment software for home video game consoles, handheld platforms and PCs. The following information sets forth geographic information on our net sales and total assets for fiscal 2010, 2009 and 2008 (in thousands): North America Europe...

  • Page 87
    ... business realignment charges and adjustments related to severance and cancellation of games which are not classified as restructuring, as follows (income/(expense)): J une 30 Quarter Ended Sept. 30 Dec. 31 March 31 F ull Fis c al Year (In thousand s) Fiscal 2010 ...Fiscal 2009 ...(b) $(824...

  • Page 88
    ... and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the Company's principal executive and principal financial officers, or persons performing similar functions, and effected by the Company's board of directors, management and...

  • Page 89
    ... public accounting firm that audited the consolidated financial statements included in this annual report on Form 10-K, has issued an audit report on our internal control over financial reporting. That report is included in this Annual Report on Form 10-K. /s/ BRIAN J. FARRELL Brian J. Farrell...

  • Page 90
    ... Board (United States), the consolidated balance sheet as of April 3, 2010 and the related consolidated statements of operations, total equity and cash flows for the year then ended of the Company and our report dated June 4, 2010 expressed an unqualified opinion on those financial statements...

  • Page 91
    .... Amount includes 150,000 outstanding warrants; for further information related to these warrants, see "Note 18-Stock-based Compensation" in the notes to the consolidated financial statements included in Item 8. The 750 outstanding options were granted under a sub-plan of the Company's Third Amended...

  • Page 92
    ... of the Company are included in Part II-Item 8: Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM...CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheets-March 31, 2010 and 2009 ...Consolidated statements of operations for the fiscal years ended March 31, 2010, 2009 and 2008...

  • Page 93
    ..., 2008 between the Company and Brian J. Farrell (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2009 (the "March 2009 10-K"). Indemnification Agreements, dated as of November 30, 2004 between the Company and each director of...

  • Page 94
    ... on December 29, 2009). Agreement dated as of December 22, 2009, between the Company and JAKKS Pacific, Inc. (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on December 29, 2009). PlayStation® 2 CD-Rom / DVD-Rom Licensed Publisher Agreement, dated as of...

  • Page 95
    ... GP and THQ (UK) Limited. Amendment to the Xbox 360 Publisher License Agreement (Russian Incentive Program; Hits Program Revisions) effective as of February 26, 2010, by and between Microsoft Licensing, GP and the Company. Confidential License Agreement for the Nintendo DS handheld platform dated as...

  • Page 96
    ... to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2008). Amendment Letter dated November 23, 2009 to Confidential First Renewal License Agreement for Nintendo DS and Nintendo DSi (EEA, Australia and New Zealand), by and between Nintendo Co., Ltd., the...

  • Page 97
    + Portions have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Securities Exchange Act of 1934, as amended. 89

  • Page 98
    ... Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: June 4, 2010 THQ INC. By: /s/ Brian J. Farrell Brian J. Farrell, Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer...

  • Page 99
    ... 2009 Operating loss Non-GAAP adjustments affecting operating loss: JAKKS preferred return rate reduction (b) JAKKS and WWE settlement (c) Changes in deferred net revenue Change in deferred cost of sales (d) Goodwill impairment Business realignment expenses (d) Stock-based compensation and related...

  • Page 100
    ... l at e d costs: Cost of sales - software amortization and royalties Product development (a) Selling and marketing (a) General and administrative (a) Total stock-based compensation and related costs $ $ 183 120 303 $ $ 5,514 5,266 10,780 $ $ Twelve Months Ended March 31, 2010 2009 2,690 2,772 5,462...

  • Page 101
    SENIOR MANAGEMENT Brian J. Farrell President and Chief Executive Officer Chairman of the Board of Directors Henry T. DeNero Independent Management Consultant FORM 10-K A copy of the company's annual report on Form 10-K for the fiscal year ended March 31, 2010 is available on THQ's website: www.thq...

  • Page 102