THQ 2011 Annual Report Download - page 29

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Our business is subject to many risks and uncertainties which may affect our future financial performance. For a discussion of our
risk factors, see "Part I—Item 1A. Risk Factors."
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The following overview is a top level discussion of our financial results, as well as trends that have, or that we reasonably believe
will, impact our operations. Management believes that an understanding of these trends and drivers is important in order to
understand our results for fiscal 2011, as well as our future prospects. This summary is not intended to be exhaustive, nor is it
intended to be a substitute for the detailed discussion and analysis provided elsewhere in this 10-K and in other documents we
have filed with the SEC.
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Consistent with our previously stated strategy, fiscal 2011 was a year for investment in our pipeline of games as we positioned
ourselves for significant growth in fiscal 2012 and beyond. This investment is reflected in increases in cash spent on software
development and licenses, versus the prior year.
In fiscal 2011 we reported net sales of $665.3 million and a net loss of $136.1 million, or $2.00 per diluted share. This compares
with net sales of $899.1 million and a net loss of $9.0 million, or $0.13 per diluted share in fiscal 2010. A significant portion of
this difference relates to the deferral of revenue from games sold late in the fourth quarter of fiscal 2011, for which we have a
continuing obligation to provide online services. We will recognize this revenue over the first six months of fiscal 2012.
Fiscal 2011 Highlights
Core Game Investments/New Intellectual Property Agreements:
In fiscal 2011, we entered into agreements with some of the most recognized creative talent in the video game and entertainment
business:
• we expect game developer Patrice Désilets, creative director on the Assassin's Creed franchise, to join us in fiscal 2012 to
form a new THQ-owned development studio housed within our video game development studio in Montreal, Quebec, focused
on developing new intellectual properties;
• we entered into a new multi-year agreement with Guillermo del Toro, writer and director of Hellboy and the Oscar-winning
Pan's Labyrinth, to create inSANE, an original trilogy of triple-A titles to be developed by our Volition, Inc. studio, and;
• we also entered into an agreement with Tomonobu Itagaki's Valhalla Game Studios to publish the studio's premier video game
title, Devil's Third, for the Xbox 360 and PS3. The game is currently scheduled for release in fiscal 2013.
Building Franchises:
• In fiscal 2011 we shipped more than 2.4 million units of internally developed and owned intellectual property Homefront; we
plan to build on this franchise in the future.
• We entered into a multi-year extension of our long-term agreement with Games Workshop to publish games based on the
Warhammer 40,000 brand.
Extend Leadership in Fighting:
• We introduced a new brand extension with the release of WWE All Stars and have plans to continue these extensions working
closely with the WWE on an integrated marketing strategy.
• We extended our exclusive, worldwide agreement with Zuffa, LLC to publish video games and social and mobile applications
based on the Ultimate Fighting Championship brand through calendar 2018.
Casual and Lifestyle portfolio:
• In fiscal 2011, we launched uDraw, a first-of-its-kind, innovative new gaming accessory targeted at consumers of all ages. It
was launched with uDraw Studio, an expansive drawing, coloring and art-based software product. In addition to uDraw
Studio, we developed and published two other software products designed for use with uDraw – Pictionary and Dood's Big
Adventure, which launched with uDraw. We shipped over 1.6 million uDraw units in fiscal 2011.
Integrated Digital Strategy:
• During fiscal 2011, we worked on the development of our most extensive downloadable content offering to date for a console
game – MX vs. ATV Alive, which released in May 2011 (in fiscal 2012). MX vs. ATV Alive was released at a suggested retail
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