THQ Reports Fiscal 2007 First Quarter Results

AGOURA HILLS, Calif., July 27: THQ Inc. (Nasdaq: THQI) today announced financial results for the first quarter of fiscal 2007 and reaffirmed its net sales and EPS guidance for the full fiscal year.

For the first quarter of fiscal 2007, THQ reported net sales of $138.8 million, which exceeded the company's guidance of $125.0 million, due primarily to better-than-anticipated sales of Disney*Pixar's Cars and MotoGP 2006 videogames. In the first quarter of fiscal 2006, the company reported net sales of $158.0 million.

The company reported a fiscal 2007 first quarter net loss of $12.1 million, or $0.19 per share, which included equity-based compensation of $0.03 per share, related to the adoption of FAS 123 ® . On a non-GAAP basis, excluding equity-based compensation expense, the net loss was $10.5 million, or $0.16 per share. Both GAAP and non-GAAP EPS exceeded the company's previous guidance of a net loss of $0.25 and $0.21 per share, respectively. For the first quarter of fiscal 2006, THQ reported a net loss of $4.0 million, or $0.06 per share. A reconciliation of non-GAAP results to GAAP results is provided in the accompanying financial tables.

"Among a number of strong-performing titles in the June quarter, Cars was especially noteworthy, with U.S. sales outpacing both Finding Nemo and The Incredibles over a comparable period," said Brian Farrell, THQ president and CEO. "Our internal development teams delivered a great interactive experience based on the film and our sales and marketing teams executed at retail. We expect sales of Cars to continue to drive our upcoming quarterly results as we complete the global roll-out across Europe and Asia this summer and then bring Cars to the Xbox 360 and Nintendo Wii platforms this holiday season."

Farrell continued, "With the roll-out of Cars overseas and the launch of our key brands on next-generation hardware, we expect to outperform the market in what is widely viewed as a transition year for the industry. Our confidence reflects the strength of THQ's product portfolio, which offers a balance of new original properties for avid gamers on next-generation consoles and Windows PC, including the upcoming Saints Row and Company of Heroes, and multi-platform releases of proven mass-market licensed titles, including games based on Disney*Pixar, WWE and Nickelodeon brands."

Financial Guidance

THQ reaffirmed previous guidance for the 2007 full fiscal year and provided initial guidance for the second fiscal quarter of 2007:

* For the 2007 fiscal year, the company continues to expect net sales in the range of $900 million to $950 million and net income in the range of $0.90 to $1.00 per diluted share. This excludes forecasted equity-based compensation expense of $0.16 per diluted share.

* For the second quarter of fiscal 2007, the company expects net sales of approximately $195 million and net income of $0.01 per diluted share. This excludes forecasted equity-based compensation expense of $0.04 per diluted share.

Recent Developments

* Cars videogames ranked #1 in the US and Australia markets for the month of June 2006, according to the NPD Group, Inc. and GfK Australia

* During the June quarter, THQ shipped more than 2 million units of Cars

* MotoGP 2006 earned the #1 Xbox 360 ranking in the UK, Benelux, France, Germany, Italy and Spain, according to UK Chart-Track, GfK, Media Control and Nielsen sell-through data

* THQ's games earned numerous accolades at the Electronic Entertainment Expo in May 2006, including Supreme Commander ("Best Strategy Game of E3 2006" by the Game Critics Award Committee), Company of Heroes TM ("Best Strategy Game of E3 2006" by IGN.com) and MotoGP 2006 ("Best Racing Game of E3 2006" by IGN.com)

* THQ announced the acquisition of the Stuntman ® franchise and its developer Paradigm Entertainment studio, along with plans to bring the Stuntman franchise to next-generation systems in fiscal 2008

* THQ announced the formation of Incinerator Studios, a sister studio to the previously announced Concrete Games studio based in Carlsbad, California

* Industry veterans Bob Aniello and Gary Rosenfeld joined THQ as senior vice president, worldwide marketing and senior vice president, business development, respectively

Non-GAAP Measures To supplement THQ's consolidated financial statements presented in accordance with GAAP, THQ provides non-GAAP net income (loss) and non-GAAP net income (loss) per share data. The presentation of these non-GAAP financial measures should be considered in addition to our GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

THQ makes reference to measures of operating income, certain expenses (including sales and marketing, product development, general and administrative), net loss and net loss per share for the first quarter of fiscal 2007, which exclude equity-based compensation to allow for a better comparison of results in the current period to those in prior periods that did not include FAS 123 ® equity-based compensation. THQ's reference to these measures should be considered in addition to results that are presented as consistent with GAAP. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future and provide further information for comparative purposes due to the adoption of the new accounting standard FAS 123 ® . Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results and business outlook.

The company believes the non-GAAP measures that exclude equity-based compensation enhance the comparability of results against prior periods. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

Investor Conference Call

THQ will host a conference call to discuss fiscal first quarter results today at 5:00 p.m. Eastern/2:00 p.m. Pacific. Please dial (866) 831-5605 or (617) 213-8851, access code 80964001 to listen to the call or visit the THQ Inc. Investor Relations home page at www.thq.com. The online archive of the broadcast will be available approximately two hours after the live call ends. In addition, a telephonic replay of the conference call will be provided approximately two hours after the live call ends through July 31, 2006, by dialing (888) 286-8010 or (617) 801-6888, access code 22358549.

About THQ

THQ Inc. (Nasdaq: THQI) is a leading worldwide developer and publisher of interactive entertainment software. Headquartered in Los Angeles County, California, THQ sells product through its global network of offices located throughout North America, Europe and Asia Pacific. More information about THQ and its products may be found at www.thq.com and www.thqwireless.com. THQ, THQ Wireless, Concrete Games, Incinerator Studios, Paradigm Entertainment, Company of Heroes, Saints Row, Stuntman and their respective logos are trademarks and/or registered trademarks of THQ Inc.

All other trademarks are trademarks or registered trademarks of their respective owners.

This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, the company's expectations for revenue and earnings per share for the fiscal 2007 second quarter and full year and for the company's product releases and financial performance in future periods. These forward-looking statements are based on current expectations, estimates and projections about the business of THQ Inc. and its subsidiaries (collectively referred to as "THQ") and are based upon management's beliefs and certain assumptions made by management. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive and technological factors affecting the operations, markets, products, services and pricing of THQ. THQ did not retain nor otherwise influence The NPD Group, Inc., Chart-Track, GfK, Media Control or Nielsen. Unless otherwise required by law, THQ disclaims any obligation to update its view on any such risks or uncertainties or to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors and the information that could materially affect THQ's financial results, described in other documents that THQ files from time to time with the Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K for the fiscal period ended March 31, 2006, and particularly the discussion of risk factors that may affect results of operations set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.