Fiscal 2005 net income increased to $62.8 million, or $1.56 per diluted share, which included $0.19 per diluted share from research and development tax credits claimed for prior years. For the same period a year ago, THQ reported net income of $35.8 million, or $0.92 per diluted share, which included a $0.07 per diluted share benefit from an insurance settlement.
Fiscal 2005 fourth quarter net sales advanced 40% to $171.9 million from $123.1 million in the same period a year ago, on strong sales of internally developed properties MX vs. ATV Unleashed and The Punisher as well as continued robust sales of titles launched in the prior quarter. For the three months ended March 31, 2005, net income increased 86% to $10.1 million, or $0.24 per diluted share, from $5.4 million, or $0.14 per diluted share, in the prior-year period.
"THQ's record growth in fiscal 2005 demonstrated our success in increasing sales of games based on our three core brands, Disney/Pixar, Nickelodeon and World Wrestling Entertainment, and also delivering strong performance from internally developed titles targeted to avid gamers, such as MX vs. ATV Unleashed, The Punisher and Warhammer 40,000: Dawn of War," said Brian Farrell, president and CEO, THQ. "THQ commands a position of strength from which to capitalize on both the huge installed base of current hardware and the upcoming launch of next-generation consoles. With some of the best mass-market brands, more than 900 people in our internal studio organization, a growing international sales team and more than $330 million in cash and short-term investments, THQ is poised to expand our leadership position in the video game industry."
Fiscal 2006 Guidance
THQ reaffirmed previous guidance for the full fiscal year ending March 31, 2006 and provided initial guidance for the fiscal first quarter ending June 30, 2005:
- Consistent with previous guidance, for the fiscal year ending March 31, 2006, THQ expects net sales of approximately $750 million and net income of approximately $1.00 per diluted share.
- For the first quarter of fiscal 2006, the company expects net sales of approximately $135 to $140 million and a net loss of about $0.15 per diluted share, reflecting stepped up marketing support for the late-quarter releases of new original properties Destroy All Humans! and Juiced , and continued investment in its wireless business.
"Our biggest franchises from our record-breaking year return in fiscal 2006: WWE SmackDown!, SpongeBob SquarePants, The Incredibles, Full Spectrum Warrior, Tak and Warhammer 40,000: Dawn of War," said Farrell. "In addition, consistent with our goal of increasing share against the core gamer, we plan to launch a select number of exciting new original properties including Destroy All Humans!, Juiced and two new original franchises for Microsoft's next-generation Xbox platform. We also expect to benefit from extending our brands onto the new handheld platforms and doubling our wireless revenues as we roll out Star Wars and other compelling content."
Fiscal 2005 Accomplishments:
- THQ published six titles that shipped more than one million units in Fiscal 2005:
- The Incredibles: more than 4.5 million units
- The SpongeBob SquarePants Movie : more than 2.5 million units
- WWE SmackDown! Vs. Raw : more than 2 million units
- Finding Nemo: more than 2 million units (over 7 million life-to- date)
- SpongeBob SquarePants : Battle for Bikini Bottom: more than one million units (over 3 million life-to-date)
- Full Spectrum Warrior : more than one million units
- THQ grew international revenues to 38% of net sales from 29% a year ago, bolstered by the increasing global appeal of the company's brands and its expanded sales organization. THQ more than doubled its internal product development personnel to over 900 from just over 400 a year ago, enabling the company to develop more franchises internally and to establish a leadership position early in the next console cycle.
- THQ Wireless revenues more than tripled to $25 million from $7 million a year ago, fueled by sales of games based on the major sports leagues, Nickelodeon and MotoGP.
- THQ renewed its exclusive master license agreement with Nickelodeon through 2010 and extended its relationship with Pixar Animation Studios to publish games based on that studio's next four films after Cars, providing a solid foundation for revenue growth through the back half of the current hardware cycle and well into the next generation of hardware.