THQ On Target To Cut Budget By $220 Million

Publisher THQ announced that it completed its cost reduction plan designed to cut its fiscal 2010 budget by $220 million, an achievement made possible through significant global workforce reductions. The Agoura Hills-based company revealed last February that it suffered a $191.8 million loss in its third quarter with revenue dropping 30 percent, prompting THQ to develop a plan to return to profitability, which involved "investing in games with the highest franchise potential." That plan also called for a 24 percent staff reduction, eliminating 600 positions worldwide. The company has achieved this with multiple studio closures and spinoffs, most recently at Rise Of Nations developer Big Huge Games, with Heavy Iron and Incinerator also spun off to independent companies. “We have executed on our previously announced business realignment actions,” says THQ president and CEO Brian Farrell. “Our goal is to return to profitability and generate positive cash flow in fiscal 2010, and to position THQ for long-term sustainable and profitable growth." The publisher expects its business realignment expenses to total $45 million, which includes some $4 million in cash costs such as severance, additional employee-related costs, and lease and other contract termination costs. Approximately $41 million of that amount is from non-cash impairment charges from THQ's cancellation of titles and long-lived assets associated with studio closures. The publisher also expects to see additional charges of up to $10 million in its fiscal 2010 as it "completes certain projects and vacates facilities." “We are confident in achieving these goals based on our focus on key market opportunities, our robust franchise portfolio and our dedicated and talented employee base,” adds Farrell. “We look forward to demonstrating success with our upcoming fiscal 2010 releases, including UFC 2009: Undisputed, Red Faction Guerrilla and Darksiders.”