Exhibit 99.1
Contacts: Bill Chardavoyne
Chief Financial Officer
(310) 255-2229
bchardavoyne@activision.com
Kristin Mulvihill Southey
Vice President, Investor Relations
(310) 255-2635
ksouthey@activision.com
Maryanne Lataif
Vice President, Corporate Communications
(310) 255-2704
mlataif@activision.com
FOR IMMEDIATE RELEASE
ACTIVISION ANNOUNCES SECOND QUARTER 2006 RESULTS
-- Company's Q2 Results Exceed Outlook --
-- Company Increases FY 2006 Revenue Outlook --
Santa Monica, CA - November 2, 2005 - Activision, Inc. (Nasdaq: ATVI) today
announced financial results for the second fiscal quarter ended September 30,
2005.
Net revenues were $222.5 million, an increase of $22.5 million from the
company's prior outlook of $200 million. Net revenues for the second quarter of
last fiscal year were $310.6 million. Net loss for the second fiscal quarter was
$13.2 million, as compared with a net income for the second fiscal quarter last
year of $25.5 million. Loss per share was $0.05, which is $0.02 better than the
company's prior outlook of a loss per share of $0.07, as compared with earnings
per diluted share of $0.09 reported for the same period last year.
Net revenues for the six-month period ended September 30, 2005, were $463.6
million, as compared to net revenues of $521.9 million reported for the
six-month period of last fiscal year. Net loss for the six-month period was
$16.8 million, or a loss per share of $0.06, as compared with net income of
$37.5 million, or earnings per diluted share of $0.14, reported for the same
period last year.
(more)
Robert A. Kotick, Chairman and CEO of Activision, stated, "Our second
quarter revenues and earnings exceeded our expectations, despite having
difficult year-over-year comparables. To date, seven of our games have shipped
more than one million units each. We remain focused on big propositions and in
the third quarter will release the strongest holiday slate in our history. We
are optimistic about our holiday titles, although we remain cautious of the many
variables that can still affect the holiday selling season and our own
performance. As we look toward the future, we will continue to leverage our
expanding portfolio of franchises and world class development capabilities to
strengthen our global competitive position."
Kotick continued, "We are excited about the long-term opportunities that
will result from the next-generation consoles and handheld platforms. These new
platforms combined with the ever increasing installed base of current-generation
console hardware and our strong portfolio of brands should enable us to continue
to take advantage of the positive market fundamentals over the long-term."
Business Highlights
Activision's second quarter results were driven by sales of Ultimate
Spider-Man(TM) for the PlayStation(R) 2 computer entertainment system, Xbox(R)
video game system from Microsoft, Nintendo(R) Game Cube(TM), Nintendo Game
Boy(R) Advance, Nintendo(R) DS(TM) video game platforms and the PC; and X-Men
Legends II: Rise of Apocalypse and World Series of Poker for the PlayStation(R)
2 computer entertainment system, Xbox(R) video game system from Microsoft,
Nintendo(R) Game Cube(TM), the PC and the PlayStation(R) Portable Entertainment
Platforms (PSP(TM)). The company also released Tony Hawk's Underground 2 Remix
and Spider-Man 2TM) in conjunction with the European launch of the PSP hardware.
Other highlights include:
o On September 12, 2005, Activision announced the appointment of Thomas
Tippl as Chief Financial Officer and Director of Activision
Publishing, Inc. A 14-year veteran of Procter & Gamble, Tippl has held
leadership positions in investor relations, global treasury, financial
and strategic planning, acquisitions and divestitures and financial
management of business units in Asia, Europe and North America.
o During the second quarter, Activision's Board of Directors approved a
four-for-three split of its common shares. The split was announced on
September 28, 2005 and was paid on October 24, 2005 to shareholders of
record as of the close of business on October 10, 2005.
(more)
Activision's third quarter slate will be driven primarily by proven
franchises which include Tony Hawk's American Wasteland(TM) for the PlayStation
2 computer entertainment system, Xbox video game system, the soon-to-be released
Xbox 360(TM) video game and entertainment system, Nintendo GameCube, Nintendo
Game Boy Advance and the Nintendo DS; Call of Duty 2(TM) and Quake 4(TM) for the
PC and Xbox 360 video game and entertainment system; Call of Duty 2: Big Red
One(TM) and True Crime: New York City(TM) for the PlayStation 2 computer
entertainment system, Xbox video game system and Nintendo GameCube; and Shrek(R)
SuperSlam for the PlayStation 2 computer entertainment system, Xbox video game
system, Nintendo GameCube, Nintendo Game Boy Advance and the Nintendo DS.
Additionally, the company will introduce two new intellectual properties
GUN(TM), from our internal studio Neversoft, which is being developed for the
PlayStation 2 computer entertainment system, Xbox video game system, Xbox
360(TM) video game and entertainment system, Nintendo GameCube, and the PC; and
The Movies(TM) for the PC.
Kotick continued, "Our ability to release our largest holiday slate in the
company's history -- eight big propositions -- prior to Thanksgiving is a
testament to our extraordinarily talented employees' dedication, innovation,
passion and commitment, as well as our organization's institutionalized product
development processes which enable us to manage a large portfolio of global
products while providing consistency with launch dates and product quality."
Company Outlook
For the full fiscal year, Activision raised its net revenue outlook to
$1.48 billion, and expects earnings per diluted share of $0.52.
The company reconfirmed its net revenue outlook for the third quarter and
expects net revenues of $790 million and earnings per diluted share of $0.52.
For the fourth quarter, Activision expects net revenues of $226 million and
earnings per diluted share of $0.05.
Conference Call
Today at 4:30 p.m. EST, Activision's management will host a conference call
and webcast to discuss its second quarter fiscal year 2006 results and outlook.
The company welcomes all members of the financial and media communities to visit
the "Investor Relations" area of www.activision.com to listen to the conference
call via live webcast or to listen to the call live by dialing into (913)
981-4902 in the U.S.
(more)
About Activision
Headquartered in Santa Monica, California, Activision, Inc. is a leading
worldwide developer, publisher and distributor of interactive entertainment and
leisure products. Founded in 1979, Activision posted net revenues of $1.4
billion for the fiscal year ended March 31, 2005.
Activision maintains operations in the U.S., Canada, the United Kingdom,
France, Germany, Italy, Spain, Japan, Australia, Scandinavia and the
Netherlands. More information about Activision and its products can be found on
the company's World Wide Web site, which is located at www.activision.com.
Note: The statements made in this press release that are not historical facts
are "forward-looking" statements. These forward-looking statements are based on
current expectations and assumptions that are subject to risks and
uncertainties. The company cautions readers of this press release that a number
of important factors could cause Activision's actual future results to differ
materially from those expressed in any such forward-looking statements.
Such factors include, without limitation, product delays, retail acceptance of
our products, industry competition, rapid changes in technology and industry
standards, protection of proprietary rights, maintenance of relationships with
key personnel, vendors and third-party developers, international economic and
political conditions, integration of recently acquired subsidiaries and
identification of suitable future acquisition opportunities. These important
factors and other factors that potentially could affect the company's financial
results are described in our filings with the Securities and Exchange
Commission, including the company's most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. Readers of this press release are referred to
such filings. The company may change its intention, belief or expectation, at
any time and without notice, based upon any changes in such factors, in the
company's assumptions or otherwise. The company undertakes no obligation to
release publicly any revisions to its forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
(Tables to Follow)
<page>
<table>
<caption>
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Quarter ended September 30, Six months ended September 30,
2005 2004 2005 2004
Restated Restated
---------- ------------ ---------- -----------
<s> <c> <c> <c> <c>
Net revenues $222,540 $310,626 $463,633 $521,902
Costs and expenses:
Cost of sales
- product costs 112,582 123,177 249,336 212,265
Cost of sales
- software royalties
and amortization 20,427 46,363 35,003 58,646
Cost of sales
- intellectual
property licenses 8,449 17,551 29,389 35,199
Product development 28,072 19,881 45,874 40,986
Sales and marketing 56,640 53,234 102,958 94,968
General and administrative 22,917 15,762 41,068 29,447
-------- -------- -------- --------
Total operating expenses 249,087 275,968 503,628 471,511
Operating income (loss) (26,547) 34,658 (39,995) 50,391
Investment income, net 6,330 2,645 13,678 4,757
Income (loss) before
provision (benefit) for
income taxes (20,217) 37,303 (26,317) 55,148
Provision (benefit)
for income taxes (6,975) 11,760 (9,490) 17,648
-------- -------- -------- --------
Net income (loss) $(13,242) $ 25,543 $(16,827) $ 37,500
======== ======== ======== ========
Basic earnings (loss)
per share $ (0.05) $ 0.10 $ (0.06) $ 0.15
Weighted average
common shares outstanding 272,129 246,231 270,643 245,576
Diluted earnings (loss)
per share $ (0.05) $ 0.09 $ (0.06) $ 0.14
Weighted average
common shares
outstanding assuming
dilution 272,129 271,439 270,643 272,227
Share and earnings per share data have been restated to reflect our
four-for-three stock splits for shareholders of record as of March 7, 2005, paid
March 22, 2005 and for shareholders of record as of October 10, 2005, paid
October 24, 2005.
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<page>
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, March 31,
2005 2005
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 750,259 $ 840,864
Accounts receivable, net 116,879 109,144
Inventories 52,035 48,018
Software development 110,248 73,096
Intellectual property licenses 10,513 21,572
Deferred income taxes 11,616 6,760
Other current assets 30,712 23,010
---------- ----------
Total current assets 1,082,262 1,122,464
========== ==========
Software development 12,643 18,518
Intellectual property licenses 18,825 14,154
Property and equipment, net 35,668 30,490
Deferred income taxes 48,181 28,041
Other assets 1,239 1,635
Goodwill 98,683 91,661
---------- ----------
Total assets $1,297,501 $1,306,963
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 90,838 $ 108,984
Accrued expenses 85,759 98,067
---------- ----------
Total current liabilities 176,597 207,051
---------- ----------
Other liabilities 656 -
---------- ----------
Total liabilities 177,253 207,051
========== ==========
Shareholders' equity:
Common stock - -
Additional paid-in capital 787,454 741,680
Retained earnings 329,787 346,614
Accumulated other
comprehensive income 4,890 11,618
Unearned compensation (1,883) -
---------- ----------
Total shareholders' equity 1,120,248 1,099,912
---------- ----------
Total liabilities and
shareholders' equity $1,297,501 $1,306,963
========== ==========
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<table>
<caption>
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter Ended September 30, 2005 and 2004
(Amounts in thousands)
Percent
Increase
Quarter Ended (Decrease)
September 30, 2005 Sepember 30, 2004
Amount % of Total Amount % of Total
<s> <c> <c> <c> <c> <c>
Geographic Revenue Mix
North America $111,904 50% $157,705 51% -29%
International 110,636 50% 152,921 49% -28%
-------- ---- -------- ---- -----
Total net revenues $222,540 100% $310,626 100% -28%
======== ==== ======== ==== =====
Activity/Platform Mix
Publishing:
Console $108,025 48% $145,542 47% -26%
Hand-held 44,287 20% 23,669 8% 87%
PC 15,095 7% 97,184 31% -84%
-------- ---- -------- ---- -----
Total publishing $167,407 75% $266,395 86% -37%
======== ==== ======== ==== =====
Distribution:
Console $ 29,848 13% $ 29,929 10% 0%
Hand-held 19,167 9% 3,556 1% 439%
PC 6,118 3% 10,746 3% -43%
-------- ---- -------- ---- -----
Total distribution $ 55,133 25% $ 44,231 14% 25%
-------- ---- -------- ---- -----
Total net revenues $222,540 100% $310,626 100% -28%
======== ==== ======== ==== =====
</table>
<table>
Percent
Increase
Six Months Ended (Decrease)
September 30, 2005 September 30, 2004
Amount % of Total Amount % of Total
<s> <c> <c> <c> <c> <c>
Geographic Revenue Mix
North America $224,224 48% $282,896 54% -21%
International 239,409 52% 239,006 46% 0%
-------- ---- -------- ---- -----
Total net revenues $463,633 100% $521,902 100% -11%
======== ==== ======== ==== =====
Activity/Platform Mix
Publishing:
Console $250,387 54% $264,669 51% -5%
Hand-held 69,618 15% 42,099 8% 65%
PC 40,953 9% 121,279 23% -66%
-------- ---- -------- ---- -----
Total publishing $360,958 78% $428,047 82% -16%
======== ==== ======== ==== =====
Distribution:
Console $ 67,936 15% $ 69,123 13% -2%
Hand-held 23,075 5% 7,211 1% 220%
PC 11,664 2% 17,521 4% -33%
-------- ---- -------- ---- -----
Total distribution $102,675 22% $ 93,855 18% 9%
-------- ---- -------- ---- -----
Total net revenues $463,633 100% $521,902 100% -11%
======== ==== ======== ==== =====
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<table>
<caption>
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter Ended September 30, 2005 and 2004
Quarter Ended Quarter Ended Six Months Ended Six Months Ended
September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004
<s> <c> <c> <c> <c>
Publishing Net Revenues
PC 9% 36% 11% 28%
- ------------------------------------ ------------ ------------ ----------- -----------
Console 65% 55% 70% 62%
- ------------------------------------ ------------ ------------ ----------- -----------
Sony PlayStation 2 39% 33% 36% 37%
Microsoft Xbox 15% 14% 26% 15%
Nintendo GameCube 11% 8% 8% 10%
Hand-held 26% 9% 19% 10%
- ------------------------------------ ------------ ------------ ----------- -----------
Nintendo Game Boy Advance 12% 9% 10% 10%
Nintendo Dual Screen 3% 0% 3% 0%
Sony PlayStation Portable 11% 0% 6% 0%
- ------------------------------------ ------------ ------------ ----------- -----------
Total publishing net revenues 100% 100% 100% 100%
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