UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 8, 2011
ACTIVISION BLIZZARD, INC.
(Exact Name of Registrant as Specified in Charter)
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Delaware |
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001-15839 |
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95-4803544 |
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(State or Other Jurisdiction of |
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(Commission File Number) |
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(IRS Employer |
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3100 Ocean Park Boulevard, Santa |
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90405 |
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(Address of Principal Executive |
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(Zip Code) |
Registrant’s telephone number, including area code: (310) 255-2000
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Certain Information Not Filed. The information in Item 2.02 of this Form 8-K and Exhibit 99.1 attached to this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such Item 2.02 or such Exhibit 99.1 or any of the information contained therein be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 2.02. Results of Operations and Financial Condition.
On November 8, 2011, Activision Blizzard, Inc. (the “Company”) issued a press release announcing results for the Company for the period ended September 30, 2011. A copy of the press release is attached hereto as Exhibit 99.1. As previously announced, the Company is hosting a conference call and Webcast in conjunction with that release.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press Release dated November 8, 2011 (furnished not filed)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: November 8, 2011 |
ACTIVISION BLIZZARD, INC. | |
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By: |
/s/ Thomas Tippl |
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Thomas Tippl |
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Chief Operating Officer and |
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Chief Financial Officer |
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press Release dated November 8, 2011 (furnished not filed) |
Exhibit 99.1
FOR IMMEDIATE RELEASE
ACTIVISION BLIZZARD ANNOUNCES BETTER-THAN-EXPECTED
THIRD QUARTER 2011 NET REVENUES AND EARNINGS
Company Raises 2011 Net Revenues and EPS Outlook
· 2011 Nine-Month Net Revenues from Digital Channels Up Over 16% From Prior Year
· Company Generated Record 2011 Nine-Month EPS
· Company Expects Record 2011 GAAP EPS of $0.76 and Non-GAAP EPS of $0.85
· Online-Enabled Product Slate Expected to Drive Profitable Growth in 2012
Santa Monica, CA — November 8, 2011 — Activision Blizzard, Inc. (Nasdaq: ATVI) today announced better-than-expected financial results for the third quarter of 2011.
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Third Quarter |
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Nine Months |
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(in millions, except EPS) |
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2011 |
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Prior |
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2010 |
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2011 |
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2010 |
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GAAP |
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Net Revenues |
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$ |
754 |
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$ |
650 |
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$ |
745 |
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$ |
3,348 |
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$ |
3,019 |
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EPS |
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$ |
0.13 |
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$ |
0.05 |
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$ |
0.04 |
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$ |
0.84 |
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$ |
0.52 |
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Non-GAAP |
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Net Revenues |
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$ |
627 |
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$ |
530 |
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$ |
857 |
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$ |
2,080 |
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$ |
2,254 |
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EPS |
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$ |
0.07 |
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$ |
0.01 |
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$ |
0.12 |
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$ |
0.31 |
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$ |
0.27 |
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*Prior Outlook was provided by the company on August 3, 2011 in its earnings release
For the quarter ended September 30, 2011, the company delivered GAAP net revenues of $754 million, as compared with $745 million for the third quarter of 2010. On a non-GAAP basis, the company’s net revenues were $627 million, as compared with $857 million for the third quarter of 2010. The company delivered record third-quarter GAAP net revenues from digital channels, accounting for more than 57% of the company’s total net revenues. On a non-GAAP basis, the company also delivered record third-quarter net revenues from digital channels, accounting for more than 62% of the quarter’s total net revenues.
For the quarter ended September 30, 2011, Activision Blizzard’s GAAP earnings per diluted share were $0.13, as compared with $0.04 for the third quarter of 2010. On a non-GAAP basis, the company’s earnings per diluted share were $0.07, as compared with $0.12 for the third quarter of 2010.
The company reports results on both a GAAP and a non-GAAP basis. Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.
Robert Kotick, Chief Executive Officer, Activision Blizzard, said, “Today, we launched Call of Duty®: Modern Warfare 3™, which is perhaps the most anticipated video game in history and Call of Duty Elite, our new online service that makes playing together easier and more fun than ever before. Call of Duty Elite is a truly new form of entertainment combining Facebook-like social networking features and online television shows, offering the most accessible way to play Call of Duty games with other people.”
Kotick continued, “We continue to strengthen our position as the worldwide leader in interactive entertainment and the broadening of our audiences is confirmation that games are becoming as important as film and television as a mass-market form of entertainment. Our record nine-month results were driven the by the continued strength of our online-enabled franchises. Based on our third-quarter performance, stronger than expected consumer response to our new entertainment property, Skylanders: Spyro’s Adventures™, and Call of Duty: Modern Warfare 3, we are raising our full-year financial outlook and expect once again to deliver record operating margins and the highest earnings per share in our company’s history.”
“Kotick continued, “One of Activision Blizzard’s greatest skills is the creation and introduction of new intellectual properties. On October 16, we released Skylanders: Spyro’s Adventures — a uniquely immersive entertainment experience that integrates the world of toys, video games and online play. The game has received terrific reviews and sales so far are exceeding our expectations. Millions of Skylander toys are already in kids’ hands, and we expect the game will be a great holiday success.”
Kotick added, “As we focus on 2012, we have a strong product pipeline which features a minimum of two highly-anticipated new titles from Blizzard Entertainment, including Diablo® III, and a new Call of Duty game from Activision Publishing. As a result, we expect to deliver another year of profitable growth. I believe our unyielding commitment to excellence and our creative talent around the globe will continue to position Activision Blizzard as the leader in interactive entertainment.”
Selected Financial Highlights:
· Q3 GAAP net revenues from digital channels were a record $427 million, accounting for 57% of total net revenues
· Q3 non-GAAP net revenues from digital channels were a record $386 million, accounting for 62% of total net revenues
· Year to date, GAAP net revenues from digital channels grew 25% to $1.28 billion, accounting for 38% of total net revenues
· Year to date, non-GAAP net revenues from digital channels grew 16% to $1.25 billion, accounting for 60% of total net revenues
· Year to date, the company has generated record operating margin and EPS
· Trailing twelve-month operating cash flow exceeded $1 billion
Selected Business Highlights:
· Activision Publishing’s Call of Duty®: Black Ops has been the #1 best-selling title in dollars in aggregate across all platforms in the U.S. and Europe for each of the first three quarters of 2011.(1)
· To date, Call of Duty: Black Ops players have logged more than 2.8 billion hours of online gameplay.(2)
· Total unique online gamers playing Call of Duty: Black Ops were more than 29% greater than the total unique online gamers who played Call of Duty: Modern Warfare® 2 during the first eleven months after each game’s release.(2)
· For the third quarter, Blizzard Entertainment had two top-10 PC games in the U.S. and Europe with World of Warcraft®: Cataclysm™ and StarCraft® II: Wings of Liberty™.(1)
· For the first nine months of the calendar year, StarCraft® II: Wings of Liberty™ was the #1 best-selling sku in dollars on the PC in the U.S. and Europe.(1)
(1)According to The NPD Group, Charttrack and Gfk
(2)According to Microsoft, Sony and Activision Blizzard internal estimates
· As of September 30, 2011, Activision Blizzard had purchased approximately 45 million shares of its common stock, for an aggregate price of approximately $502 million, under the $1.5 billion stock repurchase program authorized by its Board of Directors in February 2011.
· On October 21, 2011, Blizzard Entertainment announced plans for the fourth World of Warcraft expansion, World of Warcraft: Mists of Pandaria™.
Company Outlook
On October 4, 2011, Activision Publishing released Spider-Man™: Edge of Time and on October 16, 2011, Activision Publishing launched its innovative new entertainment property, Skylanders: Spyro’s Adventure. Additionally, on November 1, 2011, Activision Publishing shipped GoldenEye 007™: Reloaded Double ‘O’ Edition and two new console titles from its popular Cabela’s franchise—Cabela’s Survival: Shadows of Katmai and Cabela’s Adventure Camp. Today, Activision Publishing released its highly anticipated Call of Duty: Modern Warfare 3 and its innovative new digital platform, Call of Duty Elite, both of which we expect to set new standards for multiplayer gaming.
Based on third-quarter performance, stronger than expected consumer response to the new entertainment property, Skylanders: Spyro’s Adventures, and an unprecedented level of pre-orders for Call of Duty: Modern Warfare 3, Activision Blizzard is raising its outlook for calendar year 2011 from the estimates it provided on August 3, 2011.
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GAAP |
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Prior* |
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Non-GAAP |
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Prior* |
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CY 2011 |
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Net Revenues |
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$ |
4.33 |
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$ |
4.18 |
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$ |
4.25 |
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$ |
4.05 |
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EPS |
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$ |
0.76 |
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$ |
0.68 |
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$ |
0.85 |
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$ |
0.77 |
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Q4 2011 |
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Net Revenues |
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$ |
980 |
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$ |
n/a |
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$ |
2,170 |
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$ |
n/a |
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EPS |
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$ |
(0.08 |
) |
$ |
n/a |
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$ |
0.55 |
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$ |
n/a |
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*Prior outlook was provided by the company on August 3, 2011 in its earnings release.
Activision Blizzard’s financial outlook is subject to significant risks and uncertainties, including declines in demand for its products, competition, fluctuations in foreign exchange and tax rates, and counterparty risks relating to customers, licensees, licensors and manufacturers. The company’s outlook is also based on assumptions about sell-through rates for its products, and the launch timing, success and pricing of its slate of new products. Current macroeconomic conditions increase those risks and uncertainties. As a result of these and other factors, actual results may deviate materially from the outlook presented above.
Conference Call
Today at 4:30 p.m. EST, Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the third quarter and management’s outlook for the remainder of the year. The company welcomes all members of the financial and media communities and other interested parties to visit the “Investor Relations” area of www.activisionblizzard.com to listen to the conference call via live Webcast or to listen to the call live by dialing into 888-339-3504 in the U.S. with passcode 1472789.
About Activision Blizzard
Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide online, PC, console, handheld and mobile game publisher with leading positions across the major categories of the rapidly growing interactive entertainment software industry.
Activision Blizzard maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Ireland, Italy, Sweden, Spain, the Netherlands, Australia, South Korea and China. More information about Activision Blizzard and its products can be found on the company’s website, www.activisionblizzard.com.
Non-GAAP Financial Measures: In order to supplement our financial measures that are presented in accordance with GAAP, Activision Blizzard presents certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the company’s results of operations as determined in accordance with GAAP.
Activision Blizzard provides net revenues, net income (loss), earnings (loss) per share and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) certain items. The non-GAAP financial measures exclude the following items, as applicable in any given reporting period:
· the change in deferred net revenue and related cost of sales with respect to certain of the company’s online-enabled games;
· expenses related to stock-based compensation;
· expenses related to the restructuring of our Activision Publishing operations;
· the amortization of intangibles and impairment of intangible assets; and
· the income tax adjustments associated with any of the above items.
In the future, Activision Blizzard may also consider whether other significant non-recurring items should also be excluded in calculating the non-GAAP financial measures used by the company. Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard’s financial and operating performance. In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard by excluding certain items that may not be indicative of the company’s core business, operating results or future outlook. Internally, management uses these non-GAAP financial measures in assessing the company’s operating results, as well as in planning and forecasting.
Activision Blizzard’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share, and non-GAAP operating margin do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard’s performance in relation to other companies.
Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP results and outlook and, in this release, by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.
In addition to the reasons stated above, which are generally applicable to each of the items Activision Blizzard excludes from its non-GAAP financial measures, there are additional specific reasons why the company believes it is appropriate to exclude the change in deferred net revenue and related cost of sales with respect to certain of the company’s online-enabled games.
Since Activision Blizzard has determined that some of our games’ online functionality represents an essential component of gameplay and, as a result, a more-than-inconsequential separate deliverable, we recognize revenue attributed to these game titles over their estimated service periods, which may range from five months to a maximum of less than a year. The related cost of sales is deferred and recognized as the related revenues are recognized. Internally, management excludes the impact of this change in deferred net revenue and related cost of sales in its non-GAAP financial measures when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.
Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers, which is consistent with the way the company is measured by investment analysts and industry data sources. In addition, excluding the change in deferred net revenue and the related cost of sales provides a much more timely indication of trends in our operating results.
Cautionary Note Regarding Forward-looking Statements: Information in this press release that involves Activision Blizzard’s expectations, plans, intentions or strategies regarding the future, including statements under the heading “Company Outlook,” are forward-looking statements that are not facts and involve a number of risks and uncertainties. Activision Blizzard generally uses words such as “outlook,” “will,” “could,” “should,” “would,” “might,” “to be,” “plans,” “believes,” “may,” “expects,” “intends,” “anticipates,” “estimate,” “future,” “plan,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming” and similar expressions to identify forward-looking statements. Factors that could cause Activision Blizzard’s actual future results to differ materially from those expressed in the forward-looking statements set forth in this release include, but are not limited to, sales levels of Activision Blizzard’s titles, increasing concentration of titles, shifts in consumer spending trends, the impact of the current macroeconomic environment and market conditions within the video game industry, Activision Blizzard’s ability to predict consumer preferences, including interest in specific genres such as first-person action and massively multiplayer online games and preferences among competing hardware platforms, the seasonal and cyclical nature of the interactive game market, changing business models including digital delivery of content, competition, including from used games and other forms of entertainment, possible declines in software pricing, product returns and price protection, product delays, adoption rate and availability of new hardware (including peripherals) and related software, rapid changes in technology and industry standards, litigation risks and associated costs, protection of proprietary rights, maintenance of relationships with key personnel, customers, licensees, licensors, vendors, and third-party developers, including the ability to attract, retain and develop key personnel and developers that can create high quality “hit” titles, counterparty risks relating to customers, licensees, licensors and manufacturers, domestic and international economic, financial and political conditions and policies, foreign exchange rates and tax rates, and the identification of suitable future acquisition opportunities and potential challenges associated with geographic expansion, and the other factors identified in the risk factors section of Activision Blizzard’s most recent annual report on Form 10-K. The forward-looking statements in this release are based upon information available to Activision Blizzard as of the date of this release, and Activision Blizzard assumes no obligation to update any such forward-looking statements. Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Activision Blizzard and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.
###
(Tables to Follow)
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For Information Contact: |
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Kristin Southey |
Maryanne Lataif |
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SVP, Investor Relations |
SVP, Corporate Communications |
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(310) 255-2635 |
(310) 255-2704 |
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ksouthey@activision.com |
mlataif@activision.com |
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions, except per share data)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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|
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Net revenues: |
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|
|
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Product sales |
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$ |
369 |
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$ |
397 |
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$ |
2,197 |
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$ |
2,025 |
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Subscription, licensing and other revenues |
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385 |
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348 |
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1,151 |
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994 |
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Total net revenues |
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754 |
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745 |
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3,348 |
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3,019 |
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Costs and expenses: |
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Cost of sales - product costs |
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138 |
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194 |
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650 |
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765 |
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Cost of sales - massively multi-player online role playing game (“MMORPG”) |
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59 |
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61 |
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181 |
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168 |
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Cost of sales - software royalties and amortization |
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24 |
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61 |
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133 |
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211 |
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Cost of sales - intellectual property licenses |
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16 |
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33 |
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69 |
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105 |
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Product development |
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133 |
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118 |
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390 |
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361 |
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Sales and marketing |
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115 |
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110 |
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264 |
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291 |
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General and administrative |
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104 |
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113 |
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333 |
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253 |
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Restructuring |
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3 |
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— |
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24 |
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— |
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Total costs and expenses |
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592 |
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690 |
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2,044 |
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2,154 |
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Operating income |
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162 |
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55 |
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1,304 |
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865 |
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Investment and other income, net |
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3 |
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14 |
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7 |
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15 |
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Income before income tax expense |
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165 |
|
69 |
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1,311 |
|
880 |
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Income tax expense |
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17 |
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18 |
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325 |
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229 |
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Net income |
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$ |
148 |
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$ |
51 |
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$ |
986 |
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$ |
651 |
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Basic earnings per common share |
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$ |
0.13 |
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$ |
0.04 |
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$ |
0.84 |
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$ |
0.53 |
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Weighted average common shares outstanding |
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1,140 |
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1,212 |
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1,151 |
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1,230 |
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Diluted earnings per common share (1) |
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$ |
0.13 |
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$ |
0.04 |
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$ |
0.84 |
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$ |
0.52 |
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Weighted average common shares outstanding assuming dilution |
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1,148 |
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1,227 |
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1,160 |
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1,245 |
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(1) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $146 million and $972 million for the three and nine months ended September 30, 2011 as compared to the total net income of $148 million and $986 million for the same periods, respectively. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $51 million and $645 million for the three and nine months ended September 30, 2010 as compared to total net income of $51 million and $651 million for the same periods, respectively.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
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|
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September 30, |
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December 31, |
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2011 |
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2010 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
2,469 |
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$ |
2,812 |
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Short-term investments |
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432 |
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696 |
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Accounts receivable, net |
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139 |
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640 |
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Inventories |
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207 |
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112 |
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Software development |
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150 |
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147 |
| ||
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Intellectual property licenses |
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42 |
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45 |
| ||
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Deferred income taxes, net |
|
507 |
|
648 |
| ||
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Other current assets |
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136 |
|
299 |
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Total current assets |
|
4,082 |
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5,399 |
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Long-term investments |
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25 |
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23 |
| ||
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Software development |
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114 |
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55 |
| ||
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Intellectual property licenses |
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13 |
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28 |
| ||
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Property and equipment, net |
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167 |
|
169 |
| ||
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Other assets |
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15 |
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15 |
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Intangible assets, net |
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138 |
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160 |
| ||
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Trademark and trade names |
|
433 |
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433 |
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Goodwill |
|
7,126 |
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7,132 |
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Total assets |
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$ |
12,113 |
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$ |
13,414 |
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|
|
|
|
|
|
| ||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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|
|
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| ||
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Current liabilities: |
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|
|
|
| ||
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Accounts payable |
|
$ |
250 |
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$ |
363 |
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|
Deferred revenues |
|
487 |
|
1,726 |
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Accrued expenses and other liabilities |
|
542 |
|
838 |
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Total current liabilities |
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1,279 |
|
2,927 |
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Deferred income taxes, net |
|
95 |
|
120 |
| ||
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Other liabilities |
|
168 |
|
164 |
| ||
|
Total liabilities |
|
1,542 |
|
3,211 |
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|
|
|
|
|
| ||
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Shareholders’ equity: |
|
|
|
|
| ||
|
Common stock |
|
— |
|
— |
| ||
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Additional paid-in capital |
|
9,751 |
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12,353 |
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Treasury stock |
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— |
|
(2,194 |
) | ||
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Retained earnings |
|
849 |
|
57 |
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Accumulated other comprehensive income (loss) |
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(29 |
) |
(13 |
) | ||
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Total shareholders’ equity |
|
10,571 |
|
10,203 |
| ||
|
Total liabilities and shareholders’ equity |
|
$ |
12,113 |
|
$ |
13,414 |
|
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
|
Three months ended September 30, 2011 |
|
Net Revenues |
|
Cost of Sales - |
|
Cost of Sales - |
|
Cost of Sales - |
|
Cost of Sales - |
|
Product |
|
Sales and |
|
General and |
|
Restructuring |
|
Total Costs and |
| |||||||||||||
|
GAAP Measurement |
|
$ |
754 |
|
$ |
138 |
|
$ |
59 |
|
$ |
24 |
|
$ |
16 |
|
$ |
133 |
|
$ |
115 |
|
$ |
104 |
|
$ |
3 |
|
$ |
592 |
| |||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
(127 |
) |
(10 |
) |
— |
|
(10 |
) |
(2 |
) |
— |
|
— |
|
— |
|
— |
|
(22 |
) | ||||||||||||
|
Less: Stock-based compensation |
(b) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(5 |
) |
(2 |
) |
(11 |
) |
— |
|
(18 |
) | ||||||||||||
|
Less: Restructuring |
(c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(3 |
) |
(3 |
) | ||||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
— |
|
— |
|
— |
|
— |
|
(7 |
) |
— |
|
— |
|
— |
|
— |
|
(7 |
) | ||||||||||||
|
Non-GAAP Measurement |
|
|
$ |
627 |
|
$ |
128 |
|
$ |
59 |
|
$ |
14 |
|
$ |
7 |
|
$ |
128 |
|
$ |
113 |
|
$ |
93 |
|
$ |
— |
|
$ |
542 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
Three months ended September 30, 2011 |
|
Operating |
|
Net Income |
|
Basic Earnings |
|
Diluted Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
GAAP Measurement |
|
$ |
162 |
|
$ |
148 |
|
$ |
0.13 |
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
(105 |
) |
(81 |
) |
(0.07 |
) |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Stock-based compensation |
(b) |
|
18 |
|
13 |
|
0.01 |
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Restructuring |
(c) |
|
3 |
|
2 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
7 |
|
5 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Non-GAAP Measurement |
|
|
$ |
85 |
|
$ |
87 |
|
$ |
0.07 |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
Nine months ended September 30, 2011 |
|
Net Revenues |
|
Cost of Sales - |
|
Cost of Sales - |
|
Cost of Sales - |
|
Cost of Sales - |
|
Product |
|
Sales and |
|
General and |
|
Restructuring |
|
Total Costs and |
| |||||||||||||
|
GAAP Measurement |
|
$ |
3,348 |
|
$ |
650 |
|
$ |
181 |
|
$ |
133 |
|
$ |
69 |
|
$ |
390 |
|
$ |
264 |
|
$ |
333 |
|
$ |
24 |
|
$ |
2,044 |
| |||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
(1,268 |
) |
(220 |
) |
— |
|
(84 |
) |
(21 |
) |
— |
|
— |
|
— |
|
— |
|
(325 |
) | ||||||||||||
|
Less: Stock-based compensation |
(b) |
|
— |
|
— |
|
— |
|
(8 |
) |
— |
|
(15 |
) |
(4 |
) |
(34 |
) |
— |
|
(61 |
) | ||||||||||||
|
Less: Restructuring |
(c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(24 |
) |
(24 |
) | ||||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
— |
|
— |
|
— |
|
(1 |
) |
(21 |
) |
— |
|
— |
|
— |
|
— |
|
(22 |
) | ||||||||||||
|
Non-GAAP Measurement |
|
$ |
2,080 |
|
$ |
430 |
|
$ |
181 |
|
$ |
40 |
|
$ |
27 |
|
$ |
375 |
|
$ |
260 |
|
$ |
299 |
|
$ |
— |
|
$ |
1,612 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
Nine months ended September 30, 2011 |
|
Operating |
|
Net Income |
|
Basic Earnings |
|
Diluted Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
GAAP Measurement |
|
$ |
1,304 |
|
$ |
986 |
|
$ |
0.84 |
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
(943 |
) |
(699 |
) |
(0.60 |
) |
(0.59 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Stock-based compensation |
(b) |
|
61 |
|
43 |
|
0.04 |
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Restructuring |
(c) |
|
24 |
|
18 |
|
0.02 |
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
22 |
|
14 |
|
0.01 |
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Non-GAAP Measurement |
|
|
$ |
468 |
|
$ |
362 |
|
$ |
0.31 |
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
(a) Reflects the net change in deferred net revenues and related cost of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects restructuring related to our Activision Publishing operations.
(d) Reflects amortization of intangible assets from purchase price accounting.
The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $85 million and $357 million for the three and nine months ended September 30, 2011 as compared to the total non-GAAP net income of $87 million and $362 million for the same periods, respectively.
The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
|
Three months ended September 30, 2010 |
|
Net Revenues |
|
Cost of Sales - |
|
Cost of Sales - |
|
Cost of Sales - |
|
Cost of Sales - |
|
Product |
|
Sales and |
|
General and |
|
Total Costs and |
| ||||||||||||
|
GAAP Measurement |
|
$ |
745 |
|
$ |
194 |
|
$ |
61 |
|
$ |
61 |
|
$ |
33 |
|
$ |
118 |
|
$ |
110 |
|
$ |
113 |
|
$ |
690 |
| |||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
112 |
|
3 |
|
— |
|
8 |
|
4 |
|
— |
|
— |
|
— |
|
15 |
| |||||||||||
|
Less: Stock-based compensation |
(b) |
|
— |
|
— |
|
— |
|
(11 |
) |
— |
|
(6 |
) |
(2 |
) |
(15 |
) |
(34 |
) | |||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
— |
|
(1 |
) |
— |
|
(5 |
) |
(12 |
) |
— |
|
— |
|
— |
|
(18 |
) | |||||||||||
|
Non-GAAP Measurement |
|
$ |
857 |
|
$ |
196 |
|
$ |
61 |
|
$ |
53 |
|
$ |
25 |
|
$ |
112 |
|
$ |
108 |
|
$ |
98 |
|
$ |
653 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
Three months ended September 30, 2010 |
|
Operating |
|
Net Income |
|
Basic Earnings |
|
Diluted Earnings |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
GAAP Measurement |
|
$ |
55 |
|
$ |
51 |
|
$ |
0.04 |
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
97 |
|
81 |
|
0.07 |
|
0.07 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Stock-based compensation |
(b) |
|
34 |
|
21 |
|
0.02 |
|
0.02 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
18 |
|
(5 |
) |
— |
|
— |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Non-GAAP Measurement |
|
$ |
204 |
|
$ |
148 |
|
$ |
0.12 |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
Nine months ended September 30, 2010 |
|
Net Revenues |
|
Cost of Sales - |
|
Cost of Sales - MMORPG |
|
Cost of Sales - |
|
Cost of Sales - |
|
Product Development |
|
Sales and |
|
General and |
|
Total Costs and |
| ||||||||||||
|
GAAP Measurement |
|
|
$ |
3,019 |
|
$ |
765 |
|
$ |
168 |
|
$ |
211 |
|
$ |
105 |
|
$ |
361 |
|
$ |
291 |
|
$ |
253 |
|
$ |
2,154 |
| ||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
(765 |
) |
(198 |
) |
— |
|
(16 |
) |
(12 |
) |
— |
|
— |
|
— |
|
(226 |
) | |||||||||||
|
Less: Stock-based compensation |
(b) |
|
— |
|
— |
|
— |
|
(51 |
) |
— |
|
(4 |
) |
(6 |
) |
(33 |
) |
(94 |
) | |||||||||||
|
Less: Restructuring (included in general and administrative) |
(c) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(3 |
) |
(3 |
) | |||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
— |
|
(3 |
) |
— |
|
(10 |
) |
(33 |
) |
— |
|
— |
|
(1 |
) |
(47 |
) | |||||||||||
|
Non-GAAP Measurement |
|
|
$ |
2,254 |
|
$ |
564 |
|
$ |
168 |
|
$ |
134 |
|
$ |
60 |
|
$ |
357 |
|
$ |
285 |
|
$ |
216 |
|
$ |
1,784 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
Nine months ended September 30, 2010 |
|
Operating |
|
Net Income |
|
Basic Earnings |
|
Diluted Earnings |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
GAAP Measurement |
|
|
$ |
865 |
|
$ |
651 |
|
$ |
0.53 |
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
| |||||||
|
Less: Net effect from deferral in net revenues and related cost of sales |
(a) |
|
(539 |
) |
(392 |
) |
(0.32 |
) |
(0.31 |
) |
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Stock-based compensation |
(b) |
|
94 |
|
64 |
|
0.05 |
|
0.05 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Restructuring (included in general and administrative) |
(c) |
|
3 |
|
2 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Less: Amortization of intangible assets |
(d) |
|
47 |
|
12 |
|
0.01 |
|
0.01 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
Non-GAAP Measurement |
|
|
$ |
470 |
|
$ |
337 |
|
$ |
0.27 |
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
| |||||||
(a) Reflects the net change in deferred net revenues and related cost of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects restructuring related to the Business Combination with Vivendi Games. Restructuring activities includes severance costs, facility exit costs and balance sheet write down and exit costs from the cancellation of projects.
(d) Reflects amortization of intangible assets from purchase price accounting.
The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $147 million and $334 million for the three and nine months ended September 30, 2010 as compared to total non-GAAP net income of $148 million and $337 million for the same periods, respectively.
The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three and Nine Months Ended September 30, 2011 and 2010
(Amounts in millions)
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
GAAP Net Revenues by Distribution Channel |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Retail channels |
|
$ |
250 |
|
33 |
% |
$ |
320 |
|
43 |
% |
$ |
(70 |
) |
(22 |
)% |
|
Digital online channels* |
|
427 |
|
57 |
|
363 |
|
49 |
|
64 |
|
18 |
| |||
|
Total Activision and Blizzard |
|
677 |
|
90 |
|
683 |
|
92 |
|
(6 |
) |
(1 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution |
|
77 |
|
10 |
|
62 |
|
8 |
|
15 |
|
24 |
| |||
|
Total consolidated GAAP net revenues |
|
754 |
|
100 |
|
745 |
|
100 |
|
9 |
|
1 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Change in Deferred Net Revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Retail channels |
|
(86 |
) |
|
|
112 |
|
|
|
|
|
|
| |||
|
Digital online channels* |
|
(41 |
) |
|
|
— |
|
|
|
|
|
|
| |||
|
Total changes in deferred net revenues |
|
(127 |
) |
|
|
112 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-GAAP Net Revenues by Distribution Channel |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Retail channels |
|
164 |
|
26 |
|
432 |
|
51 |
|
(268 |
) |
(62 |
) | |||
|
Digital online channels* |
|
386 |
|
62 |
|
363 |
|
42 |
|
23 |
|
6 |
| |||
|
Total Activision and Blizzard |
|
550 |
|
88 |
|
795 |
|
93 |
|
(245 |
) |
(31 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution |
|
77 |
|
12 |
|
62 |
|
7 |
|
15 |
|
24 |
| |||
|
Total non-GAAP net revenues (2) |
|
$ |
627 |
|
100 |
% |
$ |
857 |
|
100 |
% |
$ |
(230 |
) |
(27 |
)% |
|
|
|
Nine Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
GAAP Net Revenues by Distribution Channel |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Retail channels |
|
$ |
1,856 |
|
56 |
% |
$ |
1,808 |
|
60 |
% |
$ |
48 |
|
3 |
% |
|
Digital online channels* |
|
1,278 |
|
38 |
|
1,026 |
|
34 |
|
252 |
|
25 |
| |||
|
Total Activision and Blizzard |
|
3,134 |
|
94 |
|
2,834 |
|
94 |
|
300 |
|
11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution |
|
214 |
|
6 |
|
185 |
|
6 |
|
29 |
|
16 |
| |||
|
Total consolidated GAAP net revenues |
|
3,348 |
|
100 |
|
3,019 |
|
100 |
|
329 |
|
11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Change in Deferred Net Revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Retail channels |
|
(1,240 |
) |
|
|
(816 |
) |
|
|
|
|
|
| |||
|
Digital online channels* |
|
(28 |
) |
|
|
51 |
|
|
|
|
|
|
| |||
|
Total changes in deferred net revenues |
|
(1,268 |
) |
|
|
(765 |
) |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-GAAP Net Revenues by Distribution Channel |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Retail channels |
|
616 |
|
30 |
|
992 |
|
44 |
|
(376 |
) |
(38 |
) | |||
|
Digital online channels* |
|
1,250 |
|
60 |
|
1,077 |
|
48 |
|
173 |
|
16 |
| |||
|
Total Activision and Blizzard |
|
1,866 |
|
90 |
|
2,069 |
|
92 |
|
(203 |
) |
(10 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution |
|
214 |
|
10 |
|
185 |
|
8 |
|
29 |
|
16 |
| |||
|
Total non-GAAP net revenues (2) |
|
$ |
2,080 |
|
100 |
% |
$ |
2,254 |
|
100 |
% |
$ |
(174 |
) |
(8 |
)% |
(1) We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
(2) Total non-GAAP net revenues presented also represents our total operating segment net revenues.
* Represents revenues from subscriptions and licensing royalties, value-added services, downloadable content, digitally distributed products, and wireless devices.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended September 30, 2011 and 2010
(Amounts in millions)
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
GAAP Net Revenues by |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision and Blizzard: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Online subscriptions* |
|
$ |
336 |
|
44 |
% |
$ |
289 |
|
39 |
% |
$ |
47 |
|
16 |
% |
|
PC and Other |
|
45 |
|
6 |
|
73 |
|
10 |
|
(28 |
) |
(38 |
) | |||
|
Sony PlayStation 3 |
|
96 |
|
13 |
|
109 |
|
15 |
|
(13 |
) |
(12 |
) | |||
|
Sony PlayStation 2 |
|
4 |
|
1 |
|
6 |
|
1 |
|
(2 |
) |
(33 |
) | |||
|
Microsoft Xbox 360 |
|
144 |
|
19 |
|
127 |
|
16 |
|
17 |
|
13 |
| |||
|
Nintendo Wii |
|
33 |
|
4 |
|
56 |
|
8 |
|
(23 |
) |
(41 |
) | |||
|
Total console^ |
|
277 |
|
37 |
|
298 |
|
40 |
|
(21 |
) |
(7 |
) | |||
|
Sony PlayStation Portable |
|
4 |
|
1 |
|
3 |
|
— |
|
1 |
|
33 |
| |||
|
Nintendo Dual Screen |
|
15 |
|
2 |
|
20 |
|
3 |
|
(5 |
) |
(25 |
) | |||
|
Total handheld |
|
19 |
|
3 |
|
23 |
|
3 |
|
(4 |
) |
(17 |
) | |||
|
Total Activision and Blizzard |
|
677 |
|
90 |
|
683 |
|
92 |
|
(6 |
) |
(1 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Total Distribution |
|
77 |
|
10 |
|
62 |
|
8 |
|
15 |
|
24 |
| |||
|
Total consolidated GAAP net revenues |
|
754 |
|
100 |
|
745 |
|
100 |
|
9 |
|
1 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Change in Deferred Net Revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision and Blizzard: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Online subscriptions* |
|
(62 |
) |
|
|
(7 |
) |
|
|
|
|
|
| |||
|
PC and Other |
|
(5 |
) |
|
|
141 |
|
|
|
|
|
|
| |||
|
Sony PlayStation 3 |
|
(18 |
) |
|
|
(5 |
) |
|
|
|
|
|
| |||
|
Microsoft Xbox 360 |
|
(36 |
) |
|
|
(26 |
) |
|
|
|
|
|
| |||
|
Nintendo Wii |
|
(5 |
) |
|
|
9 |
|
|
|
|
|
|
| |||
|
Total console^ |
|
(59 |
) |
|
|
(22 |
) |
|
|
|
|
|
| |||
|
Nintendo Dual Screen |
|
(1 |
) |
|
|
— |
|
|
|
|
|
|
| |||
|
Total changes in deferred net revenues |
|
(127 |
) |
|
|
112 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-GAAP Net Revenues by Segment/Platform Mix |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision and Blizzard: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Online subscriptions* |
|
274 |
|
44 |
|
282 |
|
33 |
|
(8 |
) |
(3 |
) | |||
|
PC and Other |
|
40 |
|
6 |
|
214 |
|
25 |
|
(174 |
) |
(81 |
) | |||
|
Sony PlayStation 3 |
|
78 |
|
12 |
|
104 |
|
12 |
|
(26 |
) |
(25 |
) | |||
|
Sony PlayStation 2 |
|
4 |
|
1 |
|
6 |
|
1 |
|
(2 |
) |
(33 |
) | |||
|
Microsoft Xbox 360 |
|
108 |
|
17 |
|
101 |
|
12 |
|
7 |
|
7 |
| |||
|
Nintendo Wii |
|
28 |
|
5 |
|
65 |
|
8 |
|
(37 |
) |
(57 |
) | |||
|
Total console^ |
|
218 |
|
35 |
|
276 |
|
33 |
|
(58 |
) |
(21 |
) | |||
|
Sony PlayStation Portable |
|
4 |
|
1 |
|
3 |
|
— |
|
1 |
|
33 |
| |||
|
Nintendo Dual Screen |
|
14 |
|
2 |
|
20 |
|
2 |
|
(6 |
) |
(30 |
) | |||
|
Total handheld |
|
18 |
|
3 |
|
23 |
|
2 |
|
(5 |
) |
(22 |
) | |||
|
Total Activision and Blizzard |
|
550 |
|
88 |
|
795 |
|
93 |
|
(245 |
) |
(31 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Total Distribution |
|
77 |
|
12 |
|
62 |
|
7 |
|
15 |
|
24 |
| |||
|
Total non-GAAP net revenues(2) |
|
$ |
627 |
|
100 |
% |
$ |
857 |
|
100 |
% |
$ |
(230 |
) |
(27 |
)% |
(1) We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
(2) Total non-GAAP net revenues presented also represents our total operating segment net revenues.
* Revenue from online subscriptions consists of revenue from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.
^ Downloadable content and its related revenues are included in each respective console platforms, hence, total console.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Nine Months Ended September 30, 2011 and 2010
(Amounts in millions)
|
|
|
Nine Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
GAAP Net Revenues by |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision and Blizzard: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Online subscriptions* |
|
$ |
1,090 |
|
33 |
% |
$ |
890 |
|
29 |
% |
$ |
200 |
|
22 |
% |
|
PC and Other |
|
251 |
|
8 |
|
201 |
|
7 |
|
50 |
|
25 |
| |||
|
Sony PlayStation 3 |
|
676 |
|
20 |
|
595 |
|
20 |
|
81 |
|
14 |
| |||
|
Sony PlayStation 2 |
|
10 |
|
— |
|
29 |
|
1 |
|
(19 |
) |
(66 |
) | |||
|
Microsoft Xbox 360 |
|
840 |
|
25 |
|
751 |
|
25 |
|
89 |
|
12 |
| |||
|
Nintendo Wii |
|
185 |
|
6 |
|
267 |
|
9 |
|
(82 |
) |
(31 |
) | |||
|
Total console^ |
|
1,711 |
|
51 |
|
1,642 |
|
55 |
|
69 |
|
4 |
| |||
|
Sony PlayStation Portable |
|
12 |
|
— |
|
11 |
|
— |
|
1 |
|
9 |
| |||
|
Nintendo Dual Screen |
|
70 |
|
2 |
|
90 |
|
3 |
|
(20 |
) |
(22 |
) | |||
|
Total handheld |
|
82 |
|
2 |
|
101 |
|
3 |
|
(19 |
) |
(19 |
) | |||
|
Total Activision and Blizzard |
|
3,134 |
|
94 |
|
2,834 |
|
94 |
|
300 |
|
11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Total Distribution |
|
214 |
|
6 |
|
185 |
|
6 |
|
29 |
|
16 |
| |||
|
Total consolidated GAAP net revenues |
|
3,348 |
|
100 |
|
3,019 |
|
100 |
|
329 |
|
11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Change in Deferred Net Revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision and Blizzard: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Online subscriptions* |
|
(185 |
) |
|
|
(13 |
) |
|
|
|
|
|
| |||
|
PC and Other |
|
(129 |
) |
|
|
81 |
|
|
|
|
|
|
| |||
|
Sony PlayStation 3 |
|
(417 |
) |
|
|
(317 |
) |
|
|
|
|
|
| |||
|
Microsoft Xbox 360 |
|
(440 |
) |
|
|
(425 |
) |
|
|
|
|
|
| |||
|
Nintendo Wii |
|
(90 |
) |
|
|
(91 |
) |
|
|
|
|
|
| |||
|
Total console^ |
|
(947 |
) |
|
|
(833 |
) |
|
|
|
|
|
| |||
|
Nintendo Dual Screen |
|
(7 |
) |
|
|
— |
|
|
|
|
|
|
| |||
|
Total changes in deferred net revenues |
|
(1,268 |
) |
|
|
(765 |
) |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-GAAP Net Revenues by Segment/Platform Mix |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision and Blizzard: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Online subscriptions* |
|
905 |
|
44 |
|
877 |
|
39 |
|
28 |
|
3 |
| |||
|
PC and Other |
|
122 |
|
6 |
|
282 |
|
13 |
|
(160 |
) |
(57 |
) | |||
|
Sony PlayStation 3 |
|
259 |
|
12 |
|
278 |
|
12 |
|
(19 |
) |
(7 |
) | |||
|
Sony PlayStation 2 |
|
10 |
|
— |
|
29 |
|
1 |
|
(19 |
) |
(66 |
) | |||
|
Microsoft Xbox 360 |
|
400 |
|
19 |
|
326 |
|
14 |
|
74 |
|
23 |
| |||
|
Nintendo Wii |
|
95 |
|
5 |
|
176 |
|
8 |
|
(81 |
) |
(46 |
) | |||
|
Total console^ |
|
764 |
|
36 |
|
809 |
|
35 |
|
(45 |
) |
(6 |
) | |||
|
Sony PlayStation Portable |
|
12 |
|
1 |
|
11 |
|
1 |
|
1 |
|
9 |
| |||
|
Nintendo Dual Screen |
|
63 |
|
3 |
|
90 |
|
4 |
|
(27 |
) |
(30 |
) | |||
|
Total handheld |
|
75 |
|
4 |
|
101 |
|
5 |
|
(26 |
) |
(26 |
) | |||
|
Total Activision and Blizzard |
|
1,866 |
|
90 |
|
2,069 |
|
92 |
|
(203 |
) |
(10 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Distribution: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Total Distribution |
|
214 |
|
10 |
|
185 |
|
8 |
|
29 |
|
16 |
| |||
|
Total non-GAAP net revenues(2) |
|
$ |
2,080 |
|
100 |
% |
$ |
2,254 |
|
100 |
% |
$ |
(174 |
) |
(8 |
)% |
(1) We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
(2) Total non-GAAP net revenues presented also represents our total operating segment net revenues.
* Revenue from online subscriptions consists of revenue from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.
^ Downloadable content and its related revenues are included in each respective console platforms, hence, total console.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three and Nine Months Ended September 30, 2011 and 2010
(Amounts in millions)
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
GAAP Net Revenues by Geographic Region |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
North America |
|
$ |
360 |
|
48 |
% |
$ |
406 |
|
54 |
% |
$ |
(46 |
) |
(11 |
)% |
|
Europe |
|
323 |
|
43 |
|
281 |
|
38 |
|
42 |
|
15 |
| |||
|
Asia Pacific |
|
71 |
|
9 |
|
58 |
|
8 |
|
13 |
|
22 |
| |||
|
Total consolidated GAAP net revenues |
|
754 |
|
100 |
|
745 |
|
100 |
|
9 |
|
1 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Change in Deferred Net Revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
North America |
|
(72 |
) |
|
|
41 |
|
|
|
|
|
|
| |||
|
Europe |
|
(45 |
) |
|
|
53 |
|
|
|
|
|
|
| |||
|
Asia Pacific |
|
(10 |
) |
|
|
18 |
|
|
|
|
|
|
| |||
|
Total changes in net revenues |
|
(127 |
) |
|
|
112 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-GAAP Net Revenues by Geographic Region |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
North America |
|
288 |
|
46 |
|
447 |
|
52 |
|
(159 |
) |
(36 |
) | |||
|
Europe |
|
278 |
|
44 |
|
334 |
|
39 |
|
(56 |
) |
(17 |
) | |||
|
Asia Pacific |
|
61 |
|
10 |
|
76 |
|
9 |
|
(15 |
) |
(20 |
) | |||
|
Total non-GAAP net revenues(2) |
|
$ |
627 |
|
100 |
% |
$ |
857 |
|
100 |
% |
$ |
(230 |
) |
(27 |
)% |
|
|
|
Nine Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
GAAP Net Revenues by Geographic Region |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
North America |
|
$ |
1,687 |
|
51 |
% |
$ |
1,675 |
|
55 |
% |
$ |
12 |
|
1 |
% |
|
Europe |
|
1,385 |
|
41 |
|
1,142 |
|
38 |
|
243 |
|
21 |
| |||
|
Asia Pacific |
|
276 |
|
8 |
|
202 |
|
7 |
|
74 |
|
37 |
| |||
|
Total consolidated GAAP net revenues |
|
3,348 |
|
100 |
|
3,019 |
|
100 |
|
329 |
|
11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Change in Deferred Net Revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
North America |
|
(703 |
) |
|
|
(462 |
) |
|
|
|
|
|
| |||
|
Europe |
|
(499 |
) |
|
|
(280 |
) |
|
|
|
|
|
| |||
|
Asia Pacific |
|
(66 |
) |
|
|
(23 |
) |
|
|
|
|
|
| |||
|
Total changes in net revenues |
|
(1,268 |
) |
|
|
(765 |
) |
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Non-GAAP Net Revenues by Geographic Region |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
North America |
|
984 |
|
47 |
|
1,213 |
|
54 |
|
(229 |
) |
(19 |
) | |||
|
Europe |
|
886 |
|
43 |
|
862 |
|
38 |
|
24 |
|
3 |
| |||
|
Asia Pacific |
|
210 |
|
10 |
|
179 |
|
8 |
|
31 |
|
17 |
| |||
|
Total non-GAAP net revenues(2) |
|
$ |
2,080 |
|
100 |
% |
$ |
2,254 |
|
100 |
% |
$ |
(174 |
) |
(8 |
)% |
(1) We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.
(2) Total non-GAAP net revenues presented also represents our total operating segment net revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
For the Three and Nine Months Ended September 30, 2011 and 2010
(Amounts in millions)
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
Segment net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision(i) |
|
$ |
253 |
|
34 |
% |
$ |
314 |
|
42 |
% |
$ |
(61 |
) |
(19 |
)% |
|
Blizzard(ii) |
|
297 |
|
39 |
|
481 |
|
65 |
|
(184 |
) |
(38 |
) | |||
|
Distribution(iii) |
|
77 |
|
10 |
|
62 |
|
8 |
|
15 |
|
24 |
| |||
|
Operating segment total |
|
627 |
|
83 |
|
857 |
|
115 |
|
(230 |
) |
(27 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Reconciliation to consolidated net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Net effect from deferral of net revenues |
|
127 |
|
17 |
|
(112 |
) |
(15 |
) |
|
|
|
| |||
|
Consolidated net revenues |
|
$ |
754 |
|
100 |
% |
$ |
745 |
|
100 |
% |
$ |
9 |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Segment income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision(i) |
|
$ |
(36 |
) |
|
|
$ |
(43 |
) |
|
|
$ |
7 |
|
NM |
% |
|
Blizzard(ii) |
|
120 |
|
|
|
246 |
|
|
|
(126 |
) |
(51 |
) | |||
|
Distribution(iii) |
|
1 |
|
|
|
1 |
|
|
|
— |
|
NM |
| |||
|
Operating segment total |
|
85 |
|
|
|
204 |
|
|
|
(119 |
) |
(58 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Reconciliation to consolidated operating income and consolidated income before income tax expense: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Net effect from deferral of net revenues and related cost of sales |
|
105 |
|
|
|
(97 |
) |
|
|
|
|
|
| |||
|
Stock-based compensation expense |
|
(18 |
) |
|
|
(34 |
) |
|
|
|
|
|
| |||
|
Restructuring |
|
(3 |
) |
|
|
— |
|
|
|
|
|
|
| |||
|
Amortization of intangible assets |
|
(7 |
) |
|
|
(18 |
) |
|
|
|
|
|
| |||
|
Consolidated operating income |
|
162 |
|
|
|
55 |
|
|
|
107 |
|
195 |
| |||
|
Investment and other income, net |
|
3 |
|
|
|
14 |
|
|
|
|
|
|
| |||
|
Consolidated income before income tax expense |
|
$ |
165 |
|
|
|
$ |
69 |
|
|
|
$ |
96 |
|
139 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Operating margin from total operating segments |
|
14 |
% |
|
|
24 |
% |
|
|
|
|
|
| |||
|
|
|
Nine Months Ended |
| |||||||||||||
|
|
|
September 30, 2011 |
|
September 30, 2010 |
|
$ Increase |
|
% Increase |
| |||||||
|
|
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
(Decrease) |
|
(Decrease) |
| |||
|
Segment net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision(i) |
|
$ |
898 |
|
27 |
% |
$ |
983 |
|
33 |
% |
$ |
(85 |
) |
(9 |
)% |
|
Blizzard(ii) |
|
968 |
|
29 |
|
1,086 |
|
36 |
|
(118 |
) |
(11 |
) | |||
|
Distribution(iii) |
|
214 |
|
6 |
|
185 |
|
6 |
|
29 |
|
16 |
| |||
|
Operating segment total |
|
2,080 |
|
62 |
|
2,254 |
|
75 |
|
(174 |
) |
(8 |
) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Reconciliation to consolidated net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Net effect from deferral of net revenues |
|
1,268 |
|
38 |
|
765 |
|
25 |
|
|
|
|
| |||
|
Consolidated net revenues |
|
$ |
3,348 |
|
100 |
% |
$ |
3,019 |
|
100 |
% |
$ |
329 |
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Segment income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Activision(i) |
|
$ |
42 |
|
|
|
$ |
(88 |
) |
|
|
$ |
130 |
|
NM |
% |
|
Blizzard(ii) |
|
425 |
|
|
|
559 |
|
|
|
(134 |
) |
(24 |
) | |||
|
Distribution(iii) |
|
1 |
|
|
|
(1 |
) |
|
|
2 |
|
NM |
| |||
|
Operating segment total |
|
468 |
|
|
|
470 |
|
|
|
(2 |
) |
— |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Reconciliation to consolidated operating income and consolidated income before income tax expense: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Net effect from deferral of net revenues and related cost of sales |
|
943 |
|
|
|
539 |
|
|
|
|
|
|
| |||
|
Stock-based compensation expense |
|
(61 |
) |
|
|
(94 |
) |
|
|
|
|
|
| |||
|
Restructuring |
|
(24 |
) |
|
|
(3 |
) |
|
|
|
|
|
| |||
|
Amortization of intangible assets |
|
(22 |
) |
|
|
(47 |
) |
|
|
|
|
|
| |||
|
Consolidated operating income |
|
1,304 |
|
|
|
865 |
|
|
|
439 |
|
51 |
| |||
|
Investment and other income, net |
|
7 |
|
|
|
15 |
|
|
|
|
|
|
| |||
|
Consolidated income before income tax expense |
|
$ |
1,311 |
|
|
|
$ |
880 |
|
|
|
$ |
431 |
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Operating margin from total operating segments |
|
23 |
% |
|
|
21 |
% |
|
|
|
|
|
| |||
(i) Activision Publishing (“Activision”) — publishes interactive software products and content.
(ii) Blizzard — Blizzard Entertainment, Inc. and its subsidiaries (“Blizzard”) publishes games and online subscription-based games in the MMORPG category.
(iii) Activision Blizzard Distribution (“Distribution”) — distributes interactive entertainment software and hardware products.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OUTLOOK
For the Quarter Ending December 31, 2011 and
Year Ending December 31, 2011
GAAP to Non-GAAP Reconciliation
(Amounts in millions, except per share data)
|
|
|
Outlook for |
|
Outlook for |
| ||
|
|
|
Three Months Ending |
|
Year Ending |
| ||
|
|
|
December 31, 2011 |
|
December 31, 2011 |
| ||
|
|
|
|
|
|
| ||
|
Net Revenues (GAAP) |
|
$ |
980 |
|
$ |
4,330 |
|
|
|
|
|
|
|
| ||
|
Excluding the impact of: |
|
|
|
|
| ||
|
Change in deferred net revenues |
(a) |
1,190 |
|
(80 |
) | ||
|
|
|
|
|
|
| ||
|
Non-GAAP Net Revenues |
|
$ |
2,170 |
|
$ |
4,250 |
|
|
|
|
|
|
|
| ||
|
Earnings (Loss) Per Diluted Share (GAAP) |
|
$ |
(0.08 |
) |
$ |
0.76 |
|
|
|
|
|
|
|
| ||
|
Excluding the impact of: |
|
|
|
|
| ||
|
Net effect from deferral in net revenues and related cost of sales |
(b) |
0.57 |
|
(0.03 |
) | ||
|
Stock-based compensation |
(c) |
0.03 |
|
0.07 |
| ||
|
Amortization of intangible assets |
(d) |
0.03 |
|
0.04 |
| ||
|
Restructuring expenses |
(e) |
— |
|
0.01 |
| ||
|
|
|
|
|
|
| ||
|
Non-GAAP Earnings Per Diluted Share |
|
$ |
0.55 |
|
$ |
0.85 |
|
(a) Reflects the net change in deferred net revenues.
(b) Reflects the net change in deferred net revenues and related cost of sales.
(c) Reflects expense related to stock-based compensation.
(d) Reflects amortization of intangible assets.
(e) Reflects expenses relating to the restructuring of our Activision Publishing operations.
The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings (loss) per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.