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Filed pursuant to
Rule 424(b)(1)
Registration No. 333-60277
PROSPECTUS
236,787 SHARES
COMMON STOCK
THQ INC.
This Prospectus relates to 236,787 shares of common stock, par value $.01
per share (the "Common Stock"), of THQ Inc., a Delaware corporation (together
with its subsidiaries, the "Company"), that may be offered from time to time by
certain holders (the "Selling Shareholders"). See "Selling Shareholders." All of
the shares of Common Stock offered hereby (the "Offered Shares") were issued by
the Company on May 1, 1998 in connection with the Company's acquisition of
GameFx, Inc. ("Game Fx").
The Company will not receive any of the proceeds from the sale of the
Offered Shares. The price to public for the Offered Shares and the proceeds to
the Selling Shareholders will depend upon the market price of such securities
when sold. The Selling Shareholders may, from time to time, sell the Offered
Shares at market prices prevailing on the NASDAQ National System Market ("NASDAQ
NMS") at the time of sale or in another manner. The Selling Shareholders may
engage brokers or dealers to sell the Common Stock and will be responsible for
all commissions and discounts, if any, so incurred. See "Plan of Distribution."
The Common Stock is quoted on the NASDAQ NMS under the trading symbol
"THQI." On August 6, 1998, the last reported sale price of the Common Stock on
NASDAQ NMS was $28 1/4 per share.
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THE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. SEE
"FORWARD-LOOKING STATEMENTS AND RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE SECURITIES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE DATE OF THE PROSPECTUS IS AUGUST 7, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission maintains a site on the World Wide Web
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. The Company's Common Stock is quoted on the NASDAQ NMS under the
trading symbol "THQI", and such reports, proxy statements, and other information
concerning the Company can also be inspected at the offices of the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, DC
20006.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Offered Shares. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission or are
contained in exhibits and schedules to the Registration Statement as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any agreement or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in each
instance reference is made to the copy of such agreement or document so filed,
each such statement being qualified in all respects by such reference. For
further information with respect to the Company and the Offered Shares,
reference is made to the Registration Statement and the exhibits thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (Commission File No. 0-18813)
with the Commission under the Exchange Act are incorporated in this Prospectus
by reference and are made a part hereof:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997;
(3) The Company's Current Reports on Form 8-K dated January 6, March 30,
May 1, and July 28, 1997; and
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A , filed on September 23, 1991.
Each document filed by the Company with the Commission subsequent to the
date of this Prospectus pursuant to Sections 13(a), 14 or 15(d) of the Exchange
Act and prior to termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and shall be part hereof from the
date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), or in any other
subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such prior statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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Copies of all documents incorporated herein by reference, other than
exhibits to such documents not specifically incorporated by reference therein,
will be provided without charge to each person to whom this Prospectus is
delivered, upon oral or written request to THQ Inc., 5016 North Parkway
Calabasas, Calabasas, California 91302, Attention: Vice President - Finance and
Administration, telephone (818) 591-1310.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
This Prospectus contains, or incorporates by reference, certain statements
that may be deemed "forward-looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. All statements
relating to the Company's objectives, strategies, plans, intentions and
expectations, and all statements (other than statements of historical facts)
that address actions, events or circumstances that the Company or its management
expects, believes or intends will occur in the future, are forward-looking
statements. All forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from historical results or those
anticipated in the forward-looking statements, including without limitation
risks and uncertainties relating to the following: the Company's ability to
timely obtain licenses for, develop and market new interactive entertainment
software titles to replace declining revenues from older titles; the
unpredictability of the level of sales that a particular title will generate,
and the corresponding risk that the Company may not recover its prepaid
royalties, guarantees and development costs; uncertainties relating to the
timing and amount of discounts, allowances and returns the Company will offer to
retailers; significant quarterly fluctuations in the Company's sales and
operating results; the effect of substantial customer concentration and credit
risk; the Company's dependence on the platform manufacturers for licenses and
manufacturing; fluctuations in both the absolute and relative popularity of
those platforms; the effect of changes in the policies of the platform
manufacturers; risks associated with the acquisition of other companies and the
integration of the operations of such other companies with those of the Company;
the effects of competition in the Company's industry; uncertainties associated
with the Company's ability to attract and retain key personnel; the inability of
third parties to achieve so-called "year 200 compliance"; the volatility of the
market price of the Common Stock; and the other risks and uncertainties set
forth in the Company's Current Report on Form 8-K dated March 31, 1998 and in
the annual, quarterly and current reports and proxy statements of the Company
incorporated by reference herein. The Company does not undertake to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
THE COMPANY
THQ develops, publishes and distributes interactive entertainment software
for the leading hardware platforms in the home video game market. The Company
currently publishes titles for Sony's PlayStation, Nintendo 64, Nintendo Game
Boy and personal computers in most interactive software genres, including
action, adventure, driving, fighting, puzzle, role playing, simulation, sports
and strategy. The Company's customers include Wal-Mart, Toys "R" Us, Kay Bee
Toys, Target, Electronics Boutique, Best Buy, other national and regional
retailers, discount store chains and specialty retailers.
The Company's predecessor (T.HQ, Inc., a New York Corporation) was formed
in 1989. In 1998, the Company reincorporated in Delaware and changed its name to
its current name. The Company's principal executive offices are located at 5016
North Parkway Calabasas, Calabasas, California 91302; and its telephone number
is (818) 591-1310.
RECENT DEVELOPMENTS
In May 1998, the Company acquired GameFx for consideration consisting of
approximately 237,000 shares of Common Stock and approximately $800,000 in cash.
Founded in 1996 by C. Noah Davis and certain investors, GameFx focuses on the
development of interactive software utilizing proprietary 3-D acceleration
technology. Upon the completion of this acquisition, Mr. Davis became the Chief
Technology Officer of the Company, and Mr. Davis continues to serve as the
President of GameFx.
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The Company believes that the market for 3-D accelerated games is rapidly
expanding. The acquisition of GameFx provides the Company with proprietary 3-D
graphics technology, which the Company believes will enhance the gaming
experience of the PC games being developed by GameFx as well as selected games
for other platforms. The Company expects to release the first PC game developed
by GameFx, Excession, in the spring of 1999.
In June 1998, the Company announced that, in partnership with JAKKS Pacific
Inc. ("JAKKS Pacific")(a manufacturer and marketer of toys), it had signed an
exclusive ten-year license agreement with Titan Sports Inc. to publish World
Wrestling Federation electronic games on all platforms. The games will be
designed, developed, manufactured and marketed by a joint venture of the Company
and JAKKS Pacific. The Company will oversee product development and sales, and
the Company and JAKKS Pacific will co-manage the marketing of the games. The
Company expects that the first game produced under this license will be released
near the end of 1999.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Offered Shares. All of such proceeds will be received by the Selling
Shareholders. See "Selling Shareholders."
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SELLING SHAREHOLDERS
The Offered Shares are offered for the account of the Selling Shareholders.
The following table and the notes thereto set forth information, as of the
date of this Prospectus, relating to the beneficial ownership (as defined in
Rule 13d-3 of the Exchange Act) of the Common Stock by each Selling Stockholder:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
NUMBER OF SHARES BENEFICIALLY OWNED
OF COMMON AFTER
NAME OF BENEFICIAL OWNER NUMBER(1) STOCK TO BE SOLD THE OFFERING(2)
------------------------ --------- ---------------- -------------------
<S> <C> <C> <C>
C. Noah Davis(3)............................... 81,122 81,122 0
3Dfx Interactive, Inc.......................... 32,963 32,963 0
James Whims(4)................................. 28,349(5) 15,849 12,500(5)
TechFund Capital L.P.(6)....................... 24,510 24,510 0
Gordon Campbell(7)............................. 19,824 19,824 0
Brian Jacobson(8).............................. 12,168 12,168 0
TechFarm II, L.P.(9)........................... 7,301 7,301 0
Kurt Bickenbach(8)............................. 6,084 6,084 0
John Burkhardt(8).............................. 6,084 6,084 0
Eric Twietmeyer(8)............................. 6,084 6,084 0
Kantz Revocable Trust.......................... 5,769 5,769 0
Jerema E. Wolosenko............................ 4,056 4,056 0
Kurt Keilhacker(10)............................ 3,326 3,326 0
Sobrato 1979 Revocable Trust................... 2,910 2,910 0
Eddie Kawamura................................. 2,882 2,882 0
Sherman Walter Wright(8)....................... 2,028 2,028 0
Koji Morihiro.................................. 1,663 1,663 0
Exis, Inc...................................... 1,455 1,455 0
Donna Bumgarner................................ 338 338 0
Robert C. Cushman and Donna J. Cushman, as
Co-Trustees of the Cushman Living Trust...... 202 202 0
Tricia Joerger................................. 169 169 0
</TABLE>
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(1) In each case constituting less than one percent of the aggregate number of
shares of Common Stock outstanding as of the date hereof (except for Mr.
Davis, whose holdings represent 1.1%).
(2) Assumes that all of the Offered Shares are sold by the Selling Shareholders.
(3) On May 1, 1998, Mr. Davis and the Company entered into a four-year
employment agreement pursuant to which Mr. Davis serves as the Chief
Technology Officer of the Company and the President and General Manager of
GameFx. Mr. Davis has agreed not to sell more than 25% of these Offered
Shares prior to May 1, 1999, more than 50% of these Offered Shares prior to
May 1, 2000, or more than 75% of these Offered Shares prior to May 1, 2001
(in each case other than to an inter vivos trust established for the benefit
of Mr. Davis and/or his family).
(4) Mr. Whims has been a director of the Company since April 1997. Mr. Whims
may also be deemed a beneficial owner of the Offered Shares owned by
TechFund Capital L.P. and TechFarm II, L.P. See notes (6) and (9).
(5) Includes 12,500 shares of Common Stock issuable upon exercise of options
currently exercisable.
(6) TechFund Capital L.P. ("TechFund") is a partnership consisting of (i)
TechFund Capital Management LLC, its general partner ("TechFund Capital
Management"), the members of which are Gordon A. Campbell, Kurt A.
Keilhacker and James L. Whims (the "Members"), and (ii) Bell Family Trust,
David F. Bellet, BT Investment Partners, Inc., Chase Equity Associates,
Computrol Limited (BVI),
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Sherman Cunningham, Florentine Partners, Fujitsu Devices Inc., Edward L.
Gelbach 1987 Trust, Innotech Corporation, ITC Ventures V, Inc., Eiji
Kawamura, Latta Family Trust, MC Silicon Valley, Inc., Mitsui Comtek Corp.,
NTT Leasing (U.S.A.), Inc., Silicon Valley Bancshares, John Michael Sobrato
1985 Separate Property Trust, Lisa Ann Sobrato 1987 Trust, Sheri Jean
Sobrato 1987 Trust, Telekom Malaysia Berhad, Erika Williams and WS
Investment Company 98A, its limited partners (the "TechFund Limited
Partners"). TechFund Capital Management, each of the Members and each of
the TechFund Limited Partners may be deemed a beneficial owner of the
Offered Shares owned by TechFund. This Registration Statement also covers
the sale of Offered Shares by (I) TechFund Capital Management and each of
the Limited Partners, in the event that TechFund makes a distribution of
Offered Shares to any of those persons, and (II) each of the Members, in
the event that TechFund Capital Management makes a distribution of Offered
Shares to any of the Members.
(7) Mr. Campbell may also be deemed a beneficial owner of the Offered Shares
owned by TechFund and TechFarm. See notes (6) and (9).
(8) Each such individual became an employee of GameFx on May 1, 1998.
(9) TechFarm II, L.P. ("TechFarm") is a partnership consisting of Gordon A.
Campbell, its general partner, and Gordon A. Campbell, Kurt A. Keilhacker,
Koji Morihiro and James L. Whims, its limited partners (the "TechFarm
Partners"), each of whom may be deemed a beneficial owner of the Offered
Shares owned by TechFarm. This Registration Statement also covers the sale
of Offered Shares by each of the TechFarm Partners in the event that
TechFarm makes a distribution of Offered Shares to any of the TechFarm
Partners.
(10) Mr. Keilhacker may also be deemed a beneficial owner of the Offered Shares
owned by TechFund and TechFarm. See notes (6) and (9).
PLAN OF DISTRIBUTION
The Offered Shares may be sold from time to time by the Selling
Stockholders. Such sales may be made in one or more of the following
transactions: (i) to underwriters who will acquire the Offered Shares for their
own account and resell such shares in one or more transactions, including
negotiated transactions, at a fixed price or at varying prices determined at the
time of sale, with any initial public offering price and any discount or
concession allowed or re-allowed or paid to dealers subject to change from time
to time; (ii) through brokers or dealers, acting as principal or agent, in
transactions (which may involve block transactions) on the NASDAQ NMS or on
stock exchanges in ordinary brokerage transactions, in negotiated transactions
or otherwise, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices or otherwise (including
without limitation sales in transactions that comply with the volume and manner
of sale provisions contained in paragraphs (e) and (f) of Rule 144 under the
Securities Act ("Rule 144")); or (iii) directly or indirectly through brokers or
agents in private sales at negotiated prices, or in any combination of such
methods of sale. This Prospectus may be supplemented or amended from time to
time to describe a specific plan of distribution.
In connection with the distribution of the Offered Shares or otherwise, a
Selling Stockholder may: enter into hedging transactions with broker-dealers or
other financial institutions, and in connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of
Common Stock in the course of hedging the positions they assume with such
Selling Stockholder; sell Common Stock short and redeliver the Offered Shares to
close out such short positions; and/or enter into option or other transactions
with broker-dealers or other financial institutions that require the delivery to
such broker-dealer or other financial institution of the Offered Shares, which
Offered Shares such broker-dealer or other financial institution may (subject to
any applicable transfer restriction contained in an agreement between such
Selling Stockholder and the Company) resell pursuant to this Prospectus as
supplemented or amended to reflect such transaction. In addition to the
foregoing, a Selling Stockholder may, from time to time, enter into other types
of hedging transactions.
A Selling Shareholder may from time to time, after the effective date of
the Registration Statement, transfer Offered Shares to a donee, successor or
other person other than for value, and such transfers will not
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be made pursuant to this Prospectus. To the extent permitted by applicable law,
this Prospectus shall cover sales by such transferee. The Company may in its
discretion supplement or amend this Prospectus to include such transferee as an
additional named selling shareholder.
Underwriters participating in any offering may receive underwriting
discounts and commissions, discounts or concessions may be allowed or re-allowed
or paid to dealers, and brokers or agents participating in such transactions may
receive brokerage or agent's commissions or fees, all in amounts to be
negotiated in connection with sales pursuant hereto. The underwriter, agent or
dealer utilized in the sale of will not confirm sales to accounts of which such
persons exercise discretionary authority. In effecting sales of the Offered
Shares, brokers or dealers engaged by a Selling Stockholder may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
compensation in the form of commissions or discounts from a Selling Stockholder
and may receive commission from the purchases of the Offered Shares for whom
such broker-dealers may act as agents, all in amounts to be negotiated,
including immediately prior to the sale.
The Selling Stockholders and all underwriters, dealers or agents, if any,
who participate in the distribution of the Offered Shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any profit on the sale of such Offered Shares by such stockholders,
and all discounts, commissions or concessions received by such underwriters,
dealers or agents, if any (whether received from a Selling Stockholder and/or
from the purchasers of the Offered Shares for whom those dealers or agents may
act as agents), may be deemed to be underwriting discounts and commissions under
the Securities Act.
Certain of the above-described underwriters, dealers, brokers or agents may
engage in transactions with, or perform services for, the Company and its
affiliates in the ordinary course of business.
Upon the Company being notified by a Selling Stockholders that any
agreement or arrangement has been entered into with a broker-dealer for the sale
of Offered Shares through a block trade, special offering or secondary
distribution or a purchase by a broker-dealer, to the extent required by
applicable law a supplement to this Prospectus will be distributed that will set
forth the name(s) of the participating underwriters, dealers or agents, the
aggregate amount of the Offered Shares being so offered and the terms of the
offering, including all underwriting discounts, commissions and other items
constituting compensation from, and the resulting net proceeds to, such Selling
Stockholder, all discounts, commissions or concessions allowed or re-allowed or
paid to dealers, if any, and, if applicable, the purchase price to be paid by
any underwriter for the Offered Shares purchased from such Selling Stockholder.
The Selling Stockholders and other persons participating in the
distribution of the Offered Shares will be subject to applicable provisions of
the Exchange Act and the rules and regulations of the Commission thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of the purchase and sale of Offered Shares by a Selling Stockholder.
Offered Shares that qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus. In addition, a Selling
Stockholder may devise, gift or otherwise transfer the Offered Shares by means
not described herein, in which event such transfer will not be pursuant to this
Prospectus.
Under an agreement that has been entered into by the Company for the
benefit of the Selling Stockholders, the Selling Stockholders are entitled to
indemnification by the Company against certain losses, damages and liabilities,
including liabilities under the Securities Act, and to contribution with respect
to payments that the Selling Stockholders may be required to make in respect
thereof.
The Company has agreed to bear the expenses of registration of the Offered
Shares and other costs and expenses incurred by the Selling Stockholders in
connection with the sale of the Offered Shares, but excluding all discounts,
commissions or fees of selling brokers or similar securities industry
professionals and any fees and expenses of counsel and accountants for the
Selling Stockholders.
No director, officer or agent of the Company is expected to be involved in
soliciting offers to purchase the Offered Shares, and no such person will be
compensated by the Company for the sale of any Offered Shares.
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LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Sidley & Austin, Los
Angeles, California. Attorneys at Sidley & Austin participating in matters for
the Company own approximately 13,340 shares of the Common Stock.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report thereon, which is incorporated herein by reference, and have been
so incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
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