THQ 2010 Annual Report Download - page 36

Download and view the complete annual report

Please find page 36 of the 2010 THQ annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

28
Net sales of our new releases decreased by $198.7 million in fiscal 2009 as compared to fiscal 2008 primarily
due to a decrease in the number of units sold. The decrease in units sold was primarily the result of releasing
25 fewer SKUs in fiscal 2009 as compared to fiscal 2008, which was primarily due to a decrease in titles from
our kids business. A SKU is a version of a title designed for play on a particular platform. The 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
compared to fiscal 2008. The decrease in the average selling price of our new releases 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.
These decreases were partially offset by the net deferred revenue activity on our new releases.
Net sales of our catalog titles remained relatively flat; however, we had a decline in the number of catalog
units shipped in fiscal 2009 as compared to fiscal 2008. The decline in units shipped was partially offset by
the fiscal 2009 recognition of the fiscal 2008 deferred revenue. Additionally, our catalog titles sold at slightly
higher average selling prices in fiscal 2009 as compared to fiscal 2008.
Net Sales by Territory
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.
Cost of Sales , Operating Expenses, Interest and Other Income (Expense), net , Income Taxes,
Noncontrolling Interest and Discontinued Operations
Excluding the impact of goodwill impairment charges of $118.8 million, cost of sales and operating 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.