Published: February 09, 2011
Activision Blizzard Reports December Quarter and Calendar Year 2010 Financial Results
SANTA MONICA, Calif., Feb. 9, 2011 /PRNewswire/ -- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced financial results for the calendar year and quarter ending December 31, 2010. Activision Blizzard reports results on both a GAAP and a non-GAAP basis. A reconciliation of the company's GAAP and non-GAAP results can be found in the attached tables.
For calendar year 2010, Activision Blizzard's GAAP net revenues increased to $4.45 billion, as compared with $4.28 billion for 2009. On a non-GAAP basis, the company's net revenues were $4.80 billion, as compared with $4.78 billion for 2009. Revenues from digital channels for the calendar year were more than $1.5 billion, an increase of more than 20% year over year.
For calendar year 2010, Activision Blizzard's GAAP earnings per diluted share increased to $0.33, as compared with $0.09 per diluted share for 2009. The 2010 results include a $0.16 per share non-cash reduction in the valuation of intangible assets reflecting weaker retail sales in the casual and music genres, while the 2009 results included a similar non-cash charge of $0.19 per share. On a non-GAAP basis, the company's earnings per diluted share grew 14.5% to $0.79, as compared with $0.69 per diluted share for 2009.
For the quarter ended December 31, 2010, Activision Blizzard's GAAP net revenues were $1.43 billion as compared with fourth-quarter 2009 net revenues of $1.56 billion. On a non-GAAP basis, the company's net revenues for the quarter were $2.55 billion, as compared with fourth-quarter 2009 non-GAAP net revenues of $2.50 billion. Revenues from digital channels for the quarter were more than $470 million, an increase of 40% year over year.
For the quarter ended December 31, 2010, Activision Blizzard had a GAAP loss per share of $0.20, inclusive of the $0.16 per share non-cash charge mentioned above. On a non-GAAP basis, the company's earnings per diluted share grew to $0.53. For the comparable quarter in 2009, the company had a GAAP loss per share of $0.23, inclusive of the $0.19 per share non-cash charge mentioned above, and non-GAAP earnings per diluted share of $0.49.
Robert Kotick, CEO of Activision Blizzard, stated, "Because of focus and disciplined execution, 2010 was another extraordinary year for Activision Blizzard. We made some of the best games we have ever made in over 30 years of being in the interactive entertainment business. We benefited from new content releases for two of the world's most successful online entertainment franchises: Activision Publishing's Call of Duty®: Black Ops and Blizzard Entertainment's World of Warcraft®: Cataclysm(TM), a new installment in the world's largest subscription-based massively multiplayer online role-playing game. During the year, we grew our net revenues, delivered record earnings, achieved record GAAP and non-GAAP operating margins of 11% and 29%, respectively, and generated $1.4 billion in operating cash flow."
Kotick added, "Activision Blizzard's key franchises have larger audience bases than ever before and we continue to see significantly enhanced user activity and engagement for our expanding online communities. Our revenues from digital channels, which now account for over 30% of our overall revenues, were driven by increased sales of Activision Publishing's Call of Duty map packs and value-added services for Blizzard Entertainment's World of Warcraft. Blizzard significantly evolved its direct digital distribution capabilities with the launch of its new Battle.net® service and saw players embrace its service offerings in record numbers. Notably, since Call of Duty: Black Ops was launched in November players have spent an average of 52 minutes per day playing online, roughly equivalent to the 55 minutes that the average user spends each day on Facebook.(1) As of February 2, 2011, more than 27 million gamers have played Call of Duty games online, logging more than 2 billion hours, or the equivalent of more than 229,000 years of gameplay.(2)"
Kotick concluded, "Online gaming continues to broaden its appeal. Our shareholders continue to be well positioned to benefit from these trends and the focus of our incredibly talented employees around the world continues to allow us to lead our industry. We expect to continue to drive long-term growth, increase our return on invested capital and generate strong cash flow as we have over the last few years. Our strong balance sheet affords us the financial flexibility to invest in games that few companies have the ability to create and allows us to provide our shareholders with value through dividends and share repurchases."
Business Highlights
-- Activision Blizzard was the #1 publisher overall in North America and
Europe for the calendar year.(3)
-- Activision Blizzard was the #1 publisher in North America on the Xbox®
360, PlayStation® 3 and PC collectively for the calendar year.(4)
-- Blizzard Entertainment's World of Warcraft: Cataclysm, which was
launched on December 7, 2010, sold through more than 3.3 million copies
worldwide during its first 24 hours of release, making it the
fastest-selling PC game of all time. It continued to sell through more
than 4.7 million copies in its first month.(5)
-- As of December 31, 2010, more than 12 million gamers worldwide are
subscribed to play Blizzard Entertainment's World of Warcraft.(6)
-- For the December quarter, in North America and Europe, Call of Duty:
Black Ops was the #1 best-selling console title in dollars ever during a
single quarter and the Call of Duty franchise was the #1 franchise
overall.(3)
-- In November 2010, Call of Duty: Black Ops became the first video game
ever to surpass $650 million in retail sales in its first five days of
release.(2) To date, the game has achieved more than $1 billion in
retail sales worldwide.(3)
-- As of January 31, 2011, total unique gamers playing Activision
Publishing's Call of Duty: Black Ops increased by more than 49% over the
number of total unique gamers that played Call of Duty®: Modern
Warfare® for the first three months after each game's release.(7)
-- On February 1, 2011, Activision Publishing released Call of Duty: Black
Ops First Strike, the first add-on pack for Call of Duty: Black Ops, on
Xbox LIVE®. The map pack set new Xbox LIVE records with more than 1.4
million downloads in the first 24 hours, an increase of more than 25%
over last year's Call of Duty: Modern Warfare 2 Stimulus Package.(7) The
map pack also will be available on the PlayStation® 3 computer
entertainment system on March 3, 2011 and on the PC later in the
quarter.
Company Outlook
Activision Blizzard will continue to invest its capital and resources in the significant opportunities afforded by online gaming worldwide and will reduce its exposure to low-margin and low-potential businesses. In 2011, the company will allocate the majority of its resources and focus toward opportunities which we expect will afford us the greatest competitive advantages and the greatest potential for best-in-class quality, high-margin digital growth, and long-term success. These opportunities include Blizzard Entertainment's games currently in development, robust investment in forthcoming Call of Duty titles, the development of a best-in-class digital community surrounding the Call of Duty franchise, a new property from Bungie and an innovative new universe with broad appeal that will be revealed at Toy Fair later this week and will bring the world of toys, video games and the Internet together in an unprecedented way. These investments should better position Activision Blizzard for long-term growth and enable it to continue expanding its position as the largest digital publisher.
At the same time, due to continued declines in the music genre, the company will disband Activision Publishing's Guitar Hero business unit and discontinue development on its Guitar Hero game for 2011. The company also will stop development on True Crime: Hong Kong(TM). These decisions are based on the desire to focus on the greatest opportunities that the company currently has to create the world's best interactive entertainment experiences.
For calendar year 2011, Activision Blizzard expects GAAP net revenues to be $3.95 billion and GAAP earnings per diluted share to be $0.56. On a non-GAAP basis, the company expects net revenues of $3.9 billion and non-GAAP earnings per diluted share to be $0.70 for the calendar year. Since Blizzard Entertainment has not confirmed a launch date for its next global release, the company's calendar year outlook at this time does not yet include a new game from Blizzard in 2011.
For the first quarter of 2011, Activision Blizzard expects GAAP net revenues of $1.28 billion, and GAAP earnings per diluted share of $0.28. The company's first quarter GAAP earnings per diluted share outlook includes the impact of between $0.02 - $0.03 of expenses related to the restructuring. On a non-GAAP basis, the company expects net revenues of $640 million and $0.07 earnings per diluted share for the first quarter.
Activision Blizzard's financial outlook is subject to significant risks and uncertainties, including declines in demand for its products, competition, the effectiveness of the company's restructuring efforts, 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 new slate of 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.
Board Authorizes Stock Repurchase Program and Declares Cash Dividend
Activision Blizzard today announced that its Board of Directors has authorized a new stock repurchase program under which the company can repurchase up to $1.5 billion of the company's outstanding common stock. This program replaces the company's $1 billion stock repurchase plan program authorized in February 2010, which expired on December 31, 2010. As of December 31, 2010, Activision Blizzard had purchased an aggregate of 86 million shares of its common stock for approximately $966 million under the 2010 program.
The Board of Directors also declared a cash dividend of $0.165 per common share payable on May 11, 2011 to shareholders of record at the close of business on March 16, 2011. This is the company's second-ever cash dividend and it represents a 10% increase over its first-ever dividend that was issued in 2010.
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 quarter and year ended December 31, 2010 and management's outlook for 2011. 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 and view a brief supporting slide presentation via live Webcast or to listen to the call live by dialing into 877-397-0292 in the U.S. with passcode 8890647.
Non-GAAP Financial Measures
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) the following items: the impact of the change in deferred net revenues and related cost of sales with respect to certain of the company's online-enabled games; expenses related to share-based payments; Activision Blizzard's non-core exit operations (which are the operating results of products and operations of the historical Vivendi Games, Inc. businesses that the company has exited or substantially wound down); costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and restructuring activities); expenses related to the restructuring of our Activision Publishing operations; the amortization of intangibles and impairment of intangible assets; and the associated tax benefits.
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 because they facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard.
Internally, management uses these non-GAAP financial measures in assessing the company's operating results, as well as in planning and forecasting.
Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Activision Blizzard recognizes that there are limitations associated with the use of these non-GAAP financial measures.
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.
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.
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 and used games, 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, the effectiveness of Activision Blizzard's restructuring efforts, 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 sections 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.
(1) According to Microsoft, Sony, Activision Blizzard internal estimates and digitalbuzzblog.com.
(2) According to Activision Blizzard internal estimates
(3) According to The NPD Group, Charttrack and Gfk
(4) According to The NPD Group
(5) According to internal company records from Blizzard Entertainment and reports from key distribution partners
(6) According to Blizzard Entertainment internal data
(7) According to Microsoft, Sony and Activision Blizzard internal estimates
(Tables to Follow)
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in millions, except per share data)
Three Months Ended
December 31,
------------------
2010 2009
---- ----
Net revenues:
Product sales $1,061 $1,232
Subscription, licensing and
other revenues 366 325
--------------------------- --- ---
Total net revenues 1,427 1,557
------------------ ----- -----
Costs and expenses:
Cost of sales -product costs 585 670
Cost of sales - massively
multi-player online role
playing game ("MMORPG") 73 54
Cost of sales -software
royalties and amortization 128 136
Cost of sales -intellectual
property licenses 92 152
Product development 275 265
Sales and marketing 226 215
General and administrative 119 94
Impairment of intangible
assets 326 409
Restructuring --- (6)
------------- --- ---
Total costs and expenses 1,824 1,989
------------------------ ----- -----
Operating income (loss) (397) (432)
Investment and other income,
net 8 (3)
---------------------------- --- ---
Income (loss) before income
tax expense (389) (435)
Income tax (benefit) expense (156) (149)
---------------------------- ---- ----
Net income (loss) $(233) $(286)
================= ===== =====
Basic earnings (loss) per
common share $(0.20) $(0.23)
Weighted average common
shares outstanding 1,198 1,265
----------------------- ----- -----
Diluted earnings (loss) per
common share $(0.20) $(0.23)
Weighted average common
shares outstanding assuming
dilution 1,198 1,265
---------------------------- ----- -----
Year Ended December 31,
-----------------------
2010 2009
---- ----
Net revenues:
Product sales $3,087 $3,080
Subscription, licensing and
other revenues 1,360 1,199
--------------------------- ----- -----
Total net revenues 4,447 4,279
------------------ ----- -----
Costs and expenses:
Cost of sales -product costs 1,350 1,432
Cost of sales - massively
multi-player online role
playing game ("MMORPG") 241 212
Cost of sales -software
royalties and amortization 338 348
Cost of sales -intellectual
property licenses 197 315
Product development 642 627
Sales and marketing 520 544
General and administrative 364 395
Impairment of intangible
assets 326 409
Restructuring --- 23
------------- --- ---
Total costs and expenses 3,978 4,305
------------------------ ----- -----
Operating income (loss) 469 (26)
Investment and other income,
net 23 18
---------------------------- --- ---
Income (loss) before income
tax expense 492 (8)
Income tax (benefit) expense 74 (121)
---------------------------- --- ----
Net income (loss) $418 $113
================= ==== ====
Basic earnings (loss) per
common share $0.34 $0.09
Weighted average common
shares outstanding 1,222 1,283
----------------------- ----- -----
Diluted earnings (loss) per
common share $0.33 $0.09
Weighted average common
shares outstanding assuming
dilution 1,236 1,311
---------------------------- ----- -----
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
December 31, December 31,
2010 2009
---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $2,812 $2,768
Short-term investments 696 477
Accounts receivable, net 640 739
Inventories 112 241
Software development 147 224
Intellectual property
licenses 45 55
Deferred income taxes, net 640 498
Other current assets 293 327
-------------------- --- ---
Total current assets 5,385 5,329
-------------------- ----- -----
Long-term investments 23 23
Software development 55 10
Intellectual property
licenses 28 28
Property and equipment, net 169 138
Other assets 21 9
Intangible assets, net 160 618
Trademark and trade names 433 433
Goodwill 7,132 7,154
-------- ----- -----
Total assets $13,406 $13,742
============ ======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
-----------------------------
Current liabilities:
Accounts payable $363 $302
Deferred revenues 1,726 1,426
Accrued expenses and other
liabilities 818 779
-------------------------- --- ---
Total current liabilities 2,907 2,507
------------------------- ----- -----
Deferred income taxes, net 112 270
Other liabilities 184 209
----------------- --- ---
Total liabilities 3,203 2,986
----------------- ----- -----
Shareholders' equity:
Common stock --- ---
Additional paid-in capital 12,353 12,376
Treasury stock (2,194) (1,235)
Retained earnings
(accumulated deficit) 57 (361)
Accumulated other
comprehensive loss (13) (24)
------------------- --- ---
Total shareholders' equity 10,203 10,756
-------------------------- ------ ------
Total liabilities and
shareholders' equity $13,406 $13,742
===================== ======= =======
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions)
Three Months Ended
December 31,
------------------
2010 2009
---- ----
Cash flows from operating
activities:
Net income (loss) $(233) $(286)
Adjustments to reconcile net income
(loss) to net
cash provided by operating
activities:
Deferred income taxes (329) (185)
Impairment of intangible assets 326 409
Depreciation and amortization 101 160
Loss on disposal of property and
equipment 1 2
Amortization and write-off of
capitalized
software development costs and
intellectual
property licenses (1) 137 89
Stock-based compensation expense
(2) 37 47
Excess tax benefits from stock
options exercises (11) (11)
Changes in operating assets and
liabilities:
Accounts receivable (395) (513)
Inventories 143 110
Software development and
intellectual property (75) (79)
Other assets (201) (163)
Deferred revenues 1,103 955
Accounts payable 130 21
Accrued expenses and other
liabilities 259 257
-------------------------- --- ---
Net cash provided by operating
activities 993 813
------------------------------ --- ---
Cash flows from investing
activities:
Proceeds from maturities of
investments 107 35
Proceeds from sale of available-
for-sale investments --- ---
Payment of contingent consideration --- ---
Purchases of available-for-sale
investments (119) (197)
Capital expenditures (21) (28)
Decrease in restricted cash 44 45
--- ---
Net cash provided by (used in)
investing activities 11 (145)
------------------------------ --- ----
Cash flows from financing
activities:
Proceeds from issuance of common
stock to
employees 19 18
Repurchase of common stock (346) (275)
Dividends paid (2) ---
Excess tax benefits from stock
option exercises 11 11
--- ---
Net cash used in financing
activities (318) (246)
-------------------------- ---- ----
Effect of foreign exchange rate
changes on cash
and cash equivalents 3 (14)
-------------------- --- ---
Net increase (decrease) in cash and
cash equivalents 689 408
Cash and cash equivalents at
beginning of period 2,123 2,360
---------------------------- ----- -----
Cash and cash equivalents at end of
period $2,812 $2,768
=================================== ====== ======
Year Ended December 31,
-----------------------
2010 2009
---- ----
Cash flows from operating
activities:
Net income (loss) $418 $113
Adjustments to reconcile net income
(loss) to net
cash provided by operating
activities:
Deferred income taxes (278) (256)
Impairment of intangible assets 326 409
Depreciation and amortization 198 347
Loss on disposal of property and
equipment 1 2
Amortization and write-off of
capitalized
software development costs and
intellectual
property licenses (1) 319 281
Stock-based compensation expense
(2) 131 156
Excess tax benefits from stock
options exercises (22) (79)
Changes in operating assets and
liabilities:
Accounts receivable 76 235
Inventories 124 21
Software development and
intellectual property (313) (308)
Other assets 17 (110)
Deferred revenues 293 503
Accounts payable 70 (18)
Accrued expenses and other
liabilities 16 (113)
-------------------------- --- ----
Net cash provided by operating
activities 1,376 1,183
------------------------------ ----- -----
Cash flows from investing
activities:
Proceeds from maturities of
investments 580 44
Proceeds from sale of available-
for-sale investments --- 2
Payment of contingent consideration (4) ---
Purchases of available-for-sale
investments (800) (425)
Capital expenditures (97) (69)
Decrease in restricted cash 9 5
--- ---
Net cash provided by (used in)
investing activities (312) (443)
------------------------------ ---- ----
Cash flows from financing
activities:
Proceeds from issuance of common
stock to
employees 73 81
Repurchase of common stock (959) (1,109)
Dividends paid (189) ---
Excess tax benefits from stock
option exercises 22 79
--- ---
Net cash used in financing
activities (1,053) (949)
-------------------------- ------ ----
Effect of foreign exchange rate
changes on cash
and cash equivalents 33 19
-------------------- --- ---
Net increase (decrease) in cash and
cash equivalents 44 (190)
Cash and cash equivalents at
beginning of period 2,768 2,958
---------------------------- ----- -----
Cash and cash equivalents at end of
period $2,812 $2,768
=================================== ====== ======
(1) Excludes deferral and amortization of stock-based compensation
expense.
(2) Includes the net effects of capitalization, deferral, and
amortization of stock-based compensation expense.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(Amounts in millions)
Three Months Ended
------------------
December
31, March 31, June 30,
2009 2010 2010
---- ---- ----
Cash Flow Data
Operating Cash Flow $813 $227 $(26)
Operating Cash Flow -
TTM 1,183 1,083 1,175
Capital Expenditures 28 12 27
Capital Expenditures -
TTM 69 71 84
Non-GAAP Free Cash
Flow 785 215 (53)
Non-GAAP Free Cash
Flow-TTM $1,114 $1,012 $1,091
Three Months Ended
------------------
September December Year over
30, 31, Year
%
Increase
2010 2010 (Decrease)
---- ---- ----------
Cash Flow
Data
Operating
Cash Flow $182 $993 22%
Operating
Cash Flow
-TTM 1,196 1,376 16
Capital
Expenditures 37 21 (25)
Capital
Expenditures
-TTM 104 97 41
Non-GAAP
Free Cash
Flow 145 972 24
Non-GAAP
Free Cash
Flow-TTM $1,092 $1,279 15%
TTM represents trailing twelve months.
Non-GAAP free cash flow represents operating cash flow minus capital
expenditures.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES
(Amounts in millions, except earnings per share data)
Cost of
Sales Cost of
- Sales
Net Product -
Three Months Ended December 31, 2010 Revenues Costs MMORPG
------------------------------------ ------ ---- ------
GAAP Measurement $1,427 $585 $73
Less: Net effect from deferral in net
revenues and related cost of sales (a) 1,121 200 -
Less: Stock-based compensation (b) - - -
Less: Restructuring (included in
general and administrative) (c) - - -
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) - (2) -
Less: Impairment of intangible assets (e) - - -
--- --- ---
Non-GAAP Measurement $2,548 $783 $73
-------------------- ====== ==== ===
Basic
Earnings
Operating Net (Loss)
Income Income per
Three Months Ended December 31, 2010 (Loss) (Loss) Share
------------------------------------ ----- ----- -----
GAAP Measurement $(397) $(233) $(0.20)
Less: Net effect from deferral in net
revenues and related cost of sales (a) 859 628 0.52
Less: Stock-based compensation (b) 37 24 0.02
Less: Restructuring (included in
general and administrative) (c) (1) - -
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) 77 38 0.03
Less: Impairment of intangible assets (e) 326 198 0.16
--- --- ----
Non-GAAP Measurement $901 $655 $0.54
-------------------- ==== ==== =====
Cost of
Sales - Cost of
Software Sales -
Royalties Intellectual
Three Months Ended December and Property Product
31, 2010 Amortization Licenses Development
--------------------------- ----- ----- -----
GAAP Measurement $128 $92 $275
Less: Net effect from deferral in net
revenues and related cost of sales (a) 45 17 -
Less: Stock-based compensation (b) (14) - (8)
Less: Restructuring (included in
general and administrative) (c) - - -
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) (6) (69) -
Less: Impairment of intangible assets (e) - - -
--- --- ---
Non-GAAP Measurement $153 $40 $267
-------------------- ==== === ====
Diluted
Earnings
(Loss)
per
Three Months Ended December 31, 2010 Share
------------------------------------ --------
GAAP Measurement $(0.20)
Less: Net effect from deferral in net
revenues and related cost of sales (a) 0.51
Less: Stock-based compensation (b) 0.02
Less: Restructuring (included in
general and administrative) (c) -
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) 0.03
Less: Impairment of intangible assets (e) 0.16
----
Non-GAAP Measurement $0.53
-------------------- =====
Sales General
and and
Three Months Ended December 31, 2010 Marketing Administrative
------------------------------------ --------- --------------
GAAP Measurement $226 $119
Less: Net effect from deferral in net
revenues and related cost of sales (a) - -
Less: Stock-based compensation (b) (2) (13)
Less: Restructuring (included in
general and administrative) (c) - 1
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) - -
Less: Impairment of intangible assets (e) - -
--- ---
Non-GAAP Measurement $224 $107
-------------------- ==== ====
Three Months Ended December 31, 2010
------------------------------------
GAAP Measurement
Less: Net effect from deferral in net
revenues and related cost of sales (a)
Less: Stock-based compensation (b)
Less: Restructuring (included in
general and administrative) (c)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d)
Less: Impairment of intangible assets (e)
Non-GAAP Measurement
--------------------
Impairment Total
of Costs
Intangible and
Three Months Ended December 31, 2010 Assets Expenses
------------------------------------ ---------- --------
GAAP Measurement $326 $1,824
Less: Net effect from deferral in net
revenues and related cost of sales (a) - 262
Less: Stock-based compensation (b) - (37)
Less: Restructuring (included in
general and administrative) (c) - 1
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) - (77)
Less: Impairment of intangible assets (e) (326) (326)
---- ----
Non-GAAP Measurement $ - $1,647
-------------------- === === ======
Three Months Ended December 31, 2010
------------------------------------
GAAP Measurement
Less: Net effect from deferral in net
revenues and related cost of sales (a)
Less: Stock-based compensation (b)
Less: Restructuring (included in
general and administrative) (c)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d)
Less: Impairment of intangible assets (e)
Non-GAAP Measurement
--------------------
Cost of
Sales Cost of
- Sales
Year Ended December Net Product -
31, 2010 Revenues Costs MMORPG
------------------- -------- ------- -------
GAAP Measurement $4,447 $1,350 $241
Less: Net effect
from deferral in
net revenues and
related cost of
sales (a) 356 3 -
Less: Stock-based
compensation (b) - - -
Less: Restructuring
(included in
general and
administrative) (c) - - -
Less: Amortization
of intangible
assets and purchase
price accounting
related adjustments (d) - (5) -
Less: Impairment of
intangible assets (e) - - -
--- --- ---
Non-GAAP Measurement $4,803 $1,348 $241
-------------------- ====== ====== ====
Basic
Earnings
Year Ended December Operating Net per
31, 2010 Income Income Share
------------------- ---------- ------- ---------
GAAP Measurement $469 $418 $0.34
Less: Net effect
from deferral in
net revenues and
related cost of
sales (a) 319 232 0.19
Less: Stock-based
compensation (b) 131 88 0.07
Less: Restructuring
(included in
general and
administrative) (c) 3 2 -
Less: Amortization
of intangible
assets and purchase
price accounting
related adjustments (d) 123 53 0.04
Less: Impairment of
intangible assets (e) 326 198 0.16
--- --- ----
Non-GAAP Measurement $1,371 $991 $0.81
-------------------- ====== ==== =====
Cost of
Sales - Cost of
Software Sales -
Royalties Intellectual
Year Ended December and Property Product
31, 2010 Amortization Licenses Development
------------------- ------------ ------------ -----------
GAAP Measurement $338 $197 $642
Less: Net effect
from deferral in
net revenues and
related cost of
sales (a) 29 5 -
Less: Stock-based
compensation (b) (65) - (12)
Less: Restructuring
(included in
general and
administrative) (c) - - -
Less: Amortization
of intangible
assets and purchase
price accounting
related adjustments (d) (15) (102) -
Less: Impairment of
intangible assets (e) - - -
--- --- ---
Non-GAAP Measurement $287 $100 $630
-------------------- ==== ==== ====
Diluted
Earnings
Year Ended December per
31, 2010 Share
------------------- --------
GAAP Measurement $0.33
Less: Net effect
from deferral in
net revenues and
related cost of
sales (a) 0.19
Less: Stock-based
compensation (b) 0.07
Less: Restructuring
(included in
general and
administrative) (c) -
Less: Amortization
of intangible
assets and purchase
price accounting
related adjustments (d) 0.04
Less: Impairment of
intangible assets (e) 0.16
----
Non-GAAP Measurement $0.79
-------------------- =====
Sales General
and and
Year Ended December 31, 2010 Marketing Administrative
---------------------------- --------- --------------
GAAP Measurement $520 $364
Less: Net effect from deferral in net
revenues and related cost of sales (a) - -
Less: Stock-based compensation (b) (8) (46)
Less: Restructuring (included in
general and administrative) (c) - (3)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) - (1)
Less: Impairment of intangible assets (e) - -
--- ---
Non-GAAP Measurement $512 $314
-------------------- ==== ====
Year Ended December 31, 2010
----------------------------
GAAP Measurement
Less: Net effect from deferral in net
revenues and related cost of sales (a)
Less: Stock-based compensation (b)
Less: Restructuring (included in
general and administrative) (c)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d)
Less: Impairment of intangible assets (e)
Non-GAAP Measurement
--------------------
Impairment Total
of Costs
Intangible and
Year Ended December 31, 2010 Assets Expenses
---------------------------- ---------- --------
GAAP Measurement 326 $3,978
Less: Net effect from deferral in net
revenues and related cost of sales (a) - 37
Less: Stock-based compensation (b) - (131)
Less: Restructuring (included in
general and administrative) (c) - (3)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) - (123)
Less: Impairment of intangible assets (e) (326) (326)
---- ----
Non-GAAP Measurement $ - $3,432
-------------------- === === ======
Year Ended December 31, 2010
----------------------------
GAAP Measurement
Less: Net effect from deferral in net
revenues and related cost of sales (a)
Less: Stock-based compensation (b)
Less: Restructuring (included in
general and administrative) (c)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d)
Less: Impairment of intangible assets (e)
Non-GAAP Measurement
--------------------
(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, and the change in the
fair value of assets and liabilities from purchase price accounting
related adjustments.
(e) Reflects impairment of intangible assets acquired as a result of
purchase price accounting.
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)
Cost
of Cost
Sales of
- Sales
Three Months Ended Net Product -
December 31, 2009 Revenues Costs MMORPG
------------------ -------- ------- ------
GAAP Measurement $1,557 $670 $54
Less: Net
effect from
deferral in
net revenues
and related
cost of sales (a) 938 194 -
Less: Stock-
based
compensation (b) - - -
Less: Costs
related to the
Business
Combination,
integration
and
restructuring (c) - - -
Less:
Amortization
of intangible
assets and
purchase price
accounting
related
adjustments (d) - (1) -
Less:
Impairment of
intangible
assets (e) - - -
Non-GAAP
Measurement $2,495 $863 $54
====== ==== ===
Basic
Earnings
Operating Net (Loss)
Three Months Ended Income Income per
December 31, 2009 (Loss) (Loss) Share
------------------ ---------- ------- ---------
GAAP Measurement $(432) $(286) $(0.23)
Less: Net
effect from
deferral in
net revenues
and related
cost of sales (a) 724 552 0.43
Less: Stock-
based
compensation (b) 47 29 0.02
Less: Costs
related to the
Business
Combination,
integration
and
restructuring (c) (6) (4) -
Less:
Amortization
of intangible
assets and
purchase price
accounting
related
adjustments (d) 142 92 0.07
Less:
Impairment of
intangible
assets (e) 409 249 0.19
Non-GAAP
Measurement $884 $632 $0.50
==== ==== =====
Cost
of
Sales Cost of
- Sales
Software -
Three Months Royalties Intellectual
Ended December and Property Product
31, 2009 Amortization Licenses Development
--------------- ------------ --------- -----------
GAAP Measurement $136 $152 $265
Less: Net
effect from
deferral in
net revenues
and related
cost of
sales (a) 16 4 -
Less: Stock-
based
compensation (b) (16) - (12)
Less: Costs
related to
the Business
Combination,
integration
and
restructuring (c) - - -
Less:
Amortization
of
intangible
assets and
purchase
price
accounting
related
adjustments (d) (29) (112) -
Less:
Impairment
of
intangible
assets (e) - - -
Non-GAAP
Measurement $107 $44 $253
==== === ====
Diluted
Earnings
Three Months (Loss)
Ended December per
31, 2009 Share
--------------- --------
GAAP Measurement $(0.23)
Less: Net
effect from
deferral in
net revenues
and related
cost of
sales (a) 0.43
Less: Stock-
based
compensation (b) 0.02
Less: Costs
related to
the Business
Combination,
integration
and
restructuring (c) -
Less:
Amortization
of
intangible
assets and
purchase
price
accounting
related
adjustments (d) 0.07
Less:
Impairment
of
intangible
assets (e) 0.19
Non-GAAP
Measurement $0.49
=====
Sales General
and and
Three Months Ended December 31, 2009 Marketing Administrative
------------------------------------ --------- ----------
GAAP Measurement $215 $94
Less: Net effect from deferral in net
revenues and related cost of sales (a) - -
Less: Stock-based compensation (b) 1 (20)
Less: Costs related to the Business
Combination, integration and
restructuring (c) - -
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d) - -
Less: Impairment of intangible assets (e) - -
Non-GAAP Measurement $216 $74
==== ==
Three Months Ended December 31, 2009
------------------------------------
GAAP Measurement
Less: Net effect from deferral in net
revenues and related cost of sales (a)
Less: Stock-based compensation (b)
Less: Costs related to the Business
Combination, integration and
restructuring (c)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d)
Less: Impairment of intangible assets (e)
Non-GAAP Measurement
Impairment Total
of Costs
Three Months Ended Intangible and
December 31, 2009 Assets Restructuring Expenses
------------------ ---------- --------- --------
GAAP Measurement $409 $(6) $1,989
Less: Net effect from
deferral in net
revenues and related
cost of sales (a) - - 214
Less: Stock-based
compensation (b) - - (47)
Less: Costs related to
the Business
Combination,
integration and
restructuring (c) - 6 6
Less: Amortization of
intangible assets and
purchase price
accounting related
adjustments (d) - - (142)
Less: Impairment of
intangible assets (e) (409) - (409)
Non-GAAP Measurement $ - $ - $1,611
=== == === == ======
Three Months Ended
December 31, 2009
------------------
GAAP Measurement
Less: Net effect from
deferral in net
revenues and related
cost of sales (a)
Less: Stock-based
compensation (b)
Less: Costs related to
the Business
Combination,
integration and
restructuring (c)
Less: Amortization of
intangible assets and
purchase price
accounting related
adjustments (d)
Less: Impairment of
intangible assets (e)
Non-GAAP Measurement
Cost
of Cost
Sales of
Year Ended - Sales
December 31, Net Product -
2009 Revenues Costs MMORPG
------------- -------- ------- ------
GAAP
Measurement $4,279 $1,432 $212
Less: Net
effect
from
deferral
in net
revenues
and
related
cost of
sales (a) 497 115 -
Less:
Stock-
based
compensation (b) - - -
Less:
Results of
Activision
Blizzard's
non-core
exit
operations (f) (1) - -
Less:
Costs
related to
the
Business
Combination,
integration
and
restructuring (c) - - -
Less:
Amortization
of
intangible
assets and
purchase
price
accounting
related
adjustments (d) - (5) -
Less:
Impairment
of
intangible
assets (e) - - -
Non-GAAP
Measurement $4,775 $1,542 $212
====== ====== ====
Basic
Year Ended Operating Earnings
December 31, Income Net per
2009 (Loss) Income Share
------------- ---------- ------- ---------
GAAP
Measurement $(26) $113 $0.09
Less: Net
effect
from
deferral
in net
revenues
and
related
cost of
sales (a) 383 279 0.22
Less:
Stock-
based
compensation (b) 154 96 0.07
Less:
Results of
Activision
Blizzard's
non-core
exit
operations (f) 8 4 -
Less:
Costs
related to
the
Business
Combination,
integration
and
restructuring (c) 47 28 0.02
Less:
Amortization
of
intangible
assets and
purchase
price
accounting
related
adjustments (d) 259 141 0.11
Less:
Impairment
of
intangible
assets (e) 409 249 0.19
Non-GAAP
Measurement $1,234 $910 $0.70
====== ==== =====
Cost
of
Sales Cost of
- Sales
Software -
Year Ended Royalties Intellectual
December 31, and Property Product
2009 Amortization Licenses Development
------------- ------------ ------------ -----------
GAAP
Measurement $348 $315 $627
Less: Net
effect from
deferral in
net
revenues
and related
cost of
sales (a) (4) (2) -
Less:
Stock-
based
compensation (b) (34) - (40)
Less:
Results of
Activision
Blizzard's
non-core
exit
operations (f) - - 4
Less: Costs
related to
the
Business
Combination,
integration
and
restructuring (c) - - -
Less:
Amortization
of
intangible
assets and
purchase
price
accounting
related
adjustments (d) (66) (186) -
Less:
Impairment
of
intangible
assets (e) - - -
Non-GAAP
Measurement $244 $127 $591
==== ==== ====
Diluted
Year Ended Earnings
December 31, per
2009 Share
------------- --------
GAAP
Measurement $0.09
Less: Net
effect from
deferral in
net
revenues
and related
cost of
sales (a) 0.21
Less:
Stock-
based
compensation (b) 0.07
Less:
Results of
Activision
Blizzard's
non-core
exit
operations (f) -
Less: Costs
related to
the
Business
Combination,
integration
and
restructuring (c) 0.02
Less:
Amortization
of
intangible
assets and
purchase
price
accounting
related
adjustments (d) 0.11
Less:
Impairment
of
intangible
assets (e) 0.19
Non-GAAP
Measurement $0.69
=====
Impairment Total
Year Ended Sales General of Costs
December 31, and and Intangible and
2009 Marketing Administrative Assets Restructuring Expenses
GAAP Measurement $544 $395 $409 $23 $4,305
Less: Net effect
from
deferral in net
revenues and
related
cost of sales(a) 5 - - - 114
Less: Stock-based
compensation (b) (9) (71) - - (154)
Less: Results of
Activision
Blizzard's
non-core exit
operations(f) (3) (10) - - (9)
Less: Costs
related to
the Business
Combination,
integration and
restructuring(c) - (24) - (23) (47)
Less: Amortization of
intangible assets and
purchase price
accounting related
adjustments (d) - (2) - - (259)
Less: Impairment of
intangible assets(e) - - (409) - (409)
Non-GAAP Measurement $537 $288 $ - $ - $3,541
==== ==== === == === == ======
Year Ended December 31, 2009 --------
GAAP Measurement
Less: Net effect from deferral in net
revenues and related cost of sales (a)
Less: Stock-based compensation (b)
Less: Results of Activision
Blizzard's non-core exit operations (f)
Less: Costs related to the Business
Combination, integration and
restructuring (c)
Less: Amortization of intangible
assets and purchase price accounting
related adjustments (d)
Less: Impairment of intangible assets (e)
Non-GAAP Measurement
(a) Reflects the net change in deferred net revenues and related cost
of sales.
(b) Includes expense related to stock-based compensation.
(c) Reflects costs related to the Business Combination with Vivendi
Games (including transaction costs, integration costs and
restructuring activities). 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, and the change in the
fair value of assets and liabilities from purchase price accounting
related adjustments.
(e) Reflects impairment of intangible assets acquired as a result of
purchase accounting.
(f) Reflects the results of products and operations from the
historical Vivendi Games businesses that the company has exited,
divested or wound down.
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 Months and Year Ended December 31, 2010 and 2009
(Amounts in millions)
Three Months Ended
------------------
December 31,
2010
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Distribution
Channel
Retail channel $820 57%
Digital online channel* 414 29
--- ---
Total Activision and Blizzard 1,234 86
Distribution 193 14
--- ---
Total consolidated GAAP net
revenues 1,427 100
----- ---
Change in Deferred Net
Revenues(1)
Retail channel 1,059
Digital online channel* 62
---
Total changes in deferred net
revenues 1,121
-----
Non-GAAP Net Revenues by
Distribution Channel
Retail channel 1,879 73
Digital online channel* 476 19
--- ---
Total Activision and Blizzard 2,355 92
Distribution 193 8
--- ---
Total non-GAAP net revenues (2) $2,548 100%
------ ---
Three Months Ended
------------------
December 31,
2009
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Distribution
Channel
Retail channel $1,000 64%
Digital online channel* 336 22
--- ---
Total Activision and Blizzard 1,336 86
Distribution 221 14
--- ---
Total consolidated GAAP net
revenues 1,557 100
----- ---
Change in Deferred Net
Revenues(1)
Retail channel 933
Digital online channel* 5
---
Total changes in deferred net
revenues 938
---
Non-GAAP Net Revenues by
Distribution Channel
Retail channel 1,933 77
Digital online channel* 341 14
--- ---
Total Activision and Blizzard 2,274 91
Distribution 221 9
--- ---
Total non-GAAP net revenues (2) $2,495 100%
------ ---
Three Months Ended
------------------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
GAAP Net Revenues by Distribution
Channel
Retail channel $(180) (18)%
Digital online channel* 78 23
---
Total Activision and Blizzard (102) (8)
Distribution (28) (13)
---
Total consolidated GAAP net
revenues (130) (8)
----
Change in Deferred Net
Revenues(1)
Retail channel
Digital online channel*
Total changes in deferred net
revenues
Non-GAAP Net Revenues by
Distribution Channel
Retail channel (54) (3)
Digital online channel* 135 40
---
Total Activision and Blizzard 81 4
Distribution (28) (13)
---
Total non-GAAP net revenues (2) $53 2%
---
Year Ended
----------
December 31,
2010
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Distribution
Channel
Retail channel $2,629 59%
Digital online channel* 1,440 32
----- ---
Total Activision and Blizzard 4,069 91
Distribution 378 9
--- ---
Total consolidated GAAP net
revenues 4,447 100
----- ---
Change in Deferred Net
Revenues(1)
Retail channel 243
Digital online channel* 113
---
Total changes in deferred net
revenues 356
---
Non-GAAP Net Revenues by
Distribution Channel
Retail channel 2,872 60
Digital online channel* 1,553 32
----- ---
Total Activision and Blizzard 4,425 92
Distribution 378 8
--- ---
Total non-GAAP net revenues (2) $4,803 100%
------ ---
Year Ended
----------
December 31,
2009
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Distribution
Channel
Retail channel $2,622 61%
Digital online channel* 1,234 29
----- ---
Total Activision and Blizzard 3,856 90
Distribution 423 10
--- ---
Total consolidated GAAP net
revenues 4,279 100
----- ---
Change in Deferred Net
Revenues(1)
Retail channel 457
Digital online channel* 39
---
Total changes in deferred net
revenues 496
---
Non-GAAP Net Revenues by
Distribution Channel
Retail channel 3,079 64
Digital online channel* 1,273 27
----- ---
Total Activision and Blizzard 4,352 91
Distribution 423 9
--- ---
Total non-GAAP net revenues (2) $4,775 100%
------ ---
Year Ended
----------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
GAAP Net Revenues by Distribution
Channel
Retail channel $7 - %
Digital online channel* 206 17
---
Total Activision and Blizzard 213 6
Distribution (45) (11)
---
Total consolidated GAAP net
revenues 168 4
---
Change in Deferred Net
Revenues(1)
Retail channel
Digital online channel*
Total changes in deferred net
revenues
Non-GAAP Net Revenues by
Distribution Channel
Retail channel (207) (7)
Digital online channel* 280 22
---
Total Activision and Blizzard 73 2
Distribution (45) (11)
---
Total non-GAAP net revenues (2) $28 1%
---
(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 contents, digitally distributed
products, and wireless devices.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months Ended December 31, 2010 and 2009
(Amounts in millions)
Three Months Ended
------------------
December 31,
2010
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Segment/
Platform Mix
Activision and Blizzard:
MMORPG $340 24%
PC and other 124 9
Sony PlayStation 3 259 18
Sony PlayStation 2 6 ---
Microsoft Xbox 360 281 20
Nintendo Wii 141 10
--- ---
Total console 687 48
Sony PlayStation Portable 6 ---
Nintendo Dual Screen 77 5
--- ---
Total handheld 83 5
--- ---
Total Activision and Blizzard 1,234 86
----- ---
Distribution:
Total Distribution 193 14
--- ---
Total consolidated GAAP net
revenues 1,427 100
----- ---
Change in Deferred Net
Revenues(1)
Activision and Blizzard:
MMORPG 204
PC and other ---
Sony PlayStation 3 393
Microsoft Xbox 360 441
Nintendo Wii 75
---
Total console 909
---
Nintendo Dual Screen 8
---
Total changes in deferred net
revenues 1,121
-----
Non-GAAP Net Revenues by
Segment/Platform Mix
Activision and Blizzard:
MMORPG 544 21
PC and other 124 5
Sony PlayStation 3 652 26
Sony PlayStation 2 6 ---
Microsoft Xbox 360 722 28
Nintendo Wii 216 8
--- ---
Total console 1,596 62
Sony PlayStation Portable 6 ---
Nintendo Dual Screen 85 4
--- ---
Total handheld 91 4
--- ---
Total Activision and Blizzard 2,355 92
----- ---
Total Distribution 193 8
--- ---
Total non-GAAP net revenues(2) $2,548 100%
------ ---
Three Months Ended
------------------
December 31,
2009
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Segment/
Platform Mix
Activision and Blizzard:
MMORPG $309 20%
PC and other 45 3
Sony PlayStation 3 228 15
Sony PlayStation 2 53 3
Microsoft Xbox 360 324 21
Nintendo Wii 260 17
--- ---
Total console 865 56
Sony PlayStation Portable 16 1
Nintendo Dual Screen 101 6
--- ---
Total handheld 117 7
--- ---
Total Activision and Blizzard 1,336 86
----- ---
Distribution:
Total Distribution 221 14
--- ---
Total consolidated GAAP net
revenues 1,557 100
----- ---
Change in Deferred Net
Revenues(1)
Activision and Blizzard:
MMORPG 12
PC and other 76
Sony PlayStation 3 343
Microsoft Xbox 360 429
Nintendo Wii 78
---
Total console 850
---
Nintendo Dual Screen ---
---
Total changes in deferred net
revenues 938
---
Non-GAAP Net Revenues by
Segment/Platform Mix
Activision and Blizzard:
MMORPG 321 12
PC and other 121 5
Sony PlayStation 3 571 23
Sony PlayStation 2 53 2
Microsoft Xbox 360 753 30
Nintendo Wii 338 14
--- ---
Total console 1,715 69
Sony PlayStation Portable 16 1
Nintendo Dual Screen 101 4
--- ---
Total handheld 117 5
--- ---
Total Activision and Blizzard 2,274 91
----- ---
Total Distribution 221 9
--- ---
Total non-GAAP net revenues(2) $2,495 100%
------ ---
Three Months Ended
------------------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
GAAP Net Revenues by Segment/
Platform Mix
Activision and Blizzard:
MMORPG $31 10%
PC and other 79 176
Sony PlayStation 3 31 14
Sony PlayStation 2 (47) (89)
Microsoft Xbox 360 (43) (13)
Nintendo Wii (119) (46)
----
Total console (178) (21)
Sony PlayStation Portable (10) (63)
Nintendo Dual Screen (24) (24)
---
Total handheld (34) (29)
---
Total Activision and Blizzard (102) (8)
----
Distribution:
Total Distribution (28) (13)
---
Total consolidated GAAP net
revenues (130) (8)
----
Change in Deferred Net
Revenues(1)
Activision and Blizzard:
MMORPG
PC and other
Sony PlayStation 3
Microsoft Xbox 360
Nintendo Wii
Total console
Nintendo Dual Screen
Total changes in deferred net
revenues
Non-GAAP Net Revenues by
Segment/Platform Mix
Activision and Blizzard:
MMORPG 223 69
PC and other 3 2
Sony PlayStation 3 81 14
Sony PlayStation 2 (47) (89)
Microsoft Xbox 360 (31) (4)
Nintendo Wii (122) (36)
----
Total console (119) (7)
Sony PlayStation Portable (10) (63)
Nintendo Dual Screen (16) (16)
---
Total handheld (26) (22)
---
Total Activision and Blizzard 81 4
---
Total Distribution (28) (13)
---
Total non-GAAP net revenues(2) $53 2%
---
(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
FINANCIAL INFORMATION
For the Year Ended December 31, 2010 and 2009
(Amounts in millions)
Year Ended
----------
December 31,
2010
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Segment/
Platform Mix
Activision and Blizzard:
MMORPG $1,230 28%
PC and other 325 7
Sony PlayStation 3 854 19
Sony PlayStation 2 35 1
Microsoft Xbox 360 1,033 23
Nintendo Wii 408 9
--- ---
Total console 2,330 52
Sony PlayStation Portable 16 ---
Nintendo Dual Screen 168 4
--- ---
Total handheld 184 4
--- ---
Total Activision and Blizzard 4,069 91
----- ---
Distribution:
Total Distribution 378 9
--- ---
Total platform mix net revenues 4,447 100
Other(1) --- ---
--- ---
Total consolidated GAAP net
revenues 4,447 100
----- ---
Change in Deferred Net Revenues
(1)
Activision and Blizzard:
MMORPG 191
PC and other 81
Sony PlayStation 3 77
Microsoft Xbox 360 15
Nintendo Wii (16)
---
Total console 76
Nintendo Dual Screen 8
---
Total changes in deferred net
revenues 356
---
Other(1) ---
---
Non-GAAP Net Revenues by
Segment/Platform Mix
Activision and Blizzard:
MMORPG 1,421 30
PC and other 406 8
Sony PlayStation 3 931 19
Sony PlayStation 2 35 1
Microsoft Xbox 360 1,048 22
Nintendo Wii 392 8
--- ---
Total console 2,406 50
Sony PlayStation Portable 16 ---
Nintendo Dual Screen 176 4
--- ---
Total handheld 192 4
--- ---
Total Activision and Blizzard 4,425 92
----- ---
Total Distribution 378 8
--- ---
Total non-GAAP net revenues(2) $4,803 100%
------ ---
Year Ended
----------
December 31,
2009
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Segment/
Platform Mix
Activision and Blizzard:
MMORPG $1,248 29%
PC and other 164 4
Sony PlayStation 3 584 14
Sony PlayStation 2 174 4
Microsoft Xbox 360 857 19
Nintendo Wii 584 14
--- ---
Total console 2,199 51
Sony PlayStation Portable 48 1
Nintendo Dual Screen 196 5
--- ---
Total handheld 244 6
--- ---
Total Activision and Blizzard 3,855 90
----- ---
Distribution:
Total Distribution 423 10
--- ---
Total platform mix net revenues 4,278 100
Other(1) 1 ---
--- ---
Total consolidated GAAP net
revenues 4,279 100
----- ---
Change in Deferred Net Revenues
(1)
Activision and Blizzard:
MMORPG (93)
PC and other 49
Sony PlayStation 3 259
Microsoft Xbox 360 284
Nintendo Wii (2)
---
Total console 541
Nintendo Dual Screen ---
---
Total changes in deferred net
revenues 497
---
Other(1) (1)
---
Non-GAAP Net Revenues by
Segment/Platform Mix
Activision and Blizzard:
MMORPG 1,155 24
PC and other 213 4
Sony PlayStation 3 843 18
Sony PlayStation 2 174 4
Microsoft Xbox 360 1,141 24
Nintendo Wii 582 12
--- ---
Total console 2,740 58
Sony PlayStation Portable 48 1
Nintendo Dual Screen 196 4
--- ---
Total handheld 244 5
--- ---
Total Activision and Blizzard 4,352 91
----- ---
Total Distribution 423 9
--- ---
Total non-GAAP net revenues(2) $4,775 100%
------ ---
Year Ended
----------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
GAAP Net Revenues by Segment/
Platform Mix
Activision and Blizzard:
MMORPG $(18) (1)%
PC and other 161 98
Sony PlayStation 3 270 46
Sony PlayStation 2 (139) (80)
Microsoft Xbox 360 176 21
Nintendo Wii (176) (30)
----
Total console 131 6
Sony PlayStation Portable (32) (67)
Nintendo Dual Screen (28) (14)
---
Total handheld (60) (25)
---
Total Activision and Blizzard 214 6
---
Distribution:
Total Distribution (45) (11)
---
Total platform mix net revenues 169 4
Other(1) (1) NM
---
Total consolidated GAAP net
revenues 168 4
---
Change in Deferred Net Revenues
(1)
Activision and Blizzard:
MMORPG
PC and other
Sony PlayStation 3
Microsoft Xbox 360
Nintendo Wii
Total console
Nintendo Dual Screen
Total changes in deferred net
revenues
Other(1)
Non-GAAP Net Revenues by
Segment/Platform Mix
Activision and Blizzard:
MMORPG 266 23
PC and other 193 91
Sony PlayStation 3 88 10
Sony PlayStation 2 (139) (80)
Microsoft Xbox 360 (93) (8)
Nintendo Wii (190) (33)
----
Total console (334) (12)
Sony PlayStation Portable (32) (67)
Nintendo Dual Screen (20) (10)
---
Total handheld (52) (21)
---
Total Activision and Blizzard 73 2
---
Total Distribution (45) (11)
---
Total non-GAAP net revenues(2) $28 1%
---
(1) We provide net revenues including (in accordance with GAAP) and
excluding (non-GAAP) the impact of changes in deferred net revenues
and other.
(2) Total non-GAAP net revenues presented also represents our total
operating segment net revenues.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Three Months And Year Ended December 31, 2010 and 2009
(Amounts in millions)
Three Months Ended
------------------
December 31,
2010
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Geographic
Region
North America $734 51%
Europe 600 42
Asia Pacific 93 7
--- ---
Total consolidated GAAP net
revenues 1,427 100
----- ---
Change in Deferred Net
Revenues(1)
North America 627
Europe 440
Asia Pacific 54
---
Total changes in net revenues 1,121
-----
Non-GAAP Net Revenues by
Geographic Region
North America 1,361 53
Europe 1,040 41
Asia Pacific 147 6
--- ---
Total non-GAAP net revenues(2) $2,548 100%
====== ===
Three Months Ended
------------------
December 31,
2009
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Geographic
Region
North America $759 49%
Europe 710 46
Asia Pacific 88 5
--- ---
Total consolidated GAAP net
revenues 1,557 100
----- ---
Change in Deferred Net
Revenues(1)
North America 528
Europe 371
Asia Pacific 39
---
Total changes in net revenues 938
---
Non-GAAP Net Revenues by
Geographic Region
North America 1,287 52
Europe 1,081 43
Asia Pacific 127 5
--- ---
Total non-GAAP net revenues(2) $2,495 100%
====== ===
Three Months Ended
------------------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
GAAP Net Revenues by Geographic
Region
North America $(25) (3)%
Europe (110) (15)
Asia Pacific 5 6
---
Total consolidated GAAP net
revenues (130) (8)
----
Change in Deferred Net
Revenues(1)
North America
Europe
Asia Pacific
Total changes in net revenues
Non-GAAP Net Revenues by
Geographic Region
North America 74 6
Europe (41) (4)
Asia Pacific 20 16
---
Total non-GAAP net revenues(2) $53 2%
===
Year Ended
----------
December 31,
2010
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Geographic
Region
North America $2,409 54%
Europe 1,743 39
Asia Pacific 295 7
--- ---
Total geographic region net
revenues 4,447 100
Other(1) --- ---
--- ---
Total consolidated GAAP net
revenues 4,447 100
----- ---
Change in Deferred Net Revenues
(1)
North America 166
Europe 159
Asia Pacific 31
---
Total changes in net revenues 356
---
Other(1) ---
---
Non-GAAP Net Revenues by
Geographic Region
North America 2,575 54
Europe 1,902 39
Asia Pacific 326 7
--- ---
Total non-GAAP net revenues(2) $4,803 100%
====== ===
Year Ended
----------
December 31,
2009
-------------
% of
Amount Total
------ -----
GAAP Net Revenues by Geographic
Region
North America $2,217 52%
Europe 1,798 42
Asia Pacific 263 6
--- ---
Total geographic region net
revenues 4,278 100
Other(1) 1 ---
--- ---
Total consolidated GAAP net
revenues 4,279 100
----- ---
Change in Deferred Net Revenues
(1)
North America 241
Europe 224
Asia Pacific 32
---
Total changes in net revenues 497
---
Other(1) (1)
---
Non-GAAP Net Revenues by
Geographic Region
North America 2,458 52
Europe 2,022 42
Asia Pacific 295 6
--- ---
Total non-GAAP net revenues(2) $4,775 100%
====== ===
Year Ended
----------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
GAAP Net Revenues by Geographic
Region
North America $192 9%
Europe (55) (3)
Asia Pacific 32 12
---
Total geographic region net
revenues 169 4
Other(1) (1) NM
---
Total consolidated GAAP net
revenues 168 4
---
Change in Deferred Net Revenues
(1)
North America
Europe
Asia Pacific
Total changes in net revenues
Other(1)
Non-GAAP Net Revenues by
Geographic Region
North America 117 5
Europe (120) (6)
Asia Pacific 31 11
---
Total non-GAAP net revenues(2) $28 1%
===
(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 Months And Year Ended December 31, 2010 and 2009
(Amounts in millions)
Three Months Ended
------------------
December 31, 2010
-----------------
% of
Amount Total
------ -----
Segment net revenues:
Activision(i) $1,785 125%
Blizzard(ii) 570 40
Distribution(iii) 193 14
--- ---
Operating segment total 2,548 179
Reconciliation to consolidated
net revenues:
Net effect from deferral of net
revenues (1,121) (79)
------ ---
Consolidated net revenues $1,427 100%
====== ===
Segment income from operations:
Activision(i) $599
Blizzard(ii) 291
Distribution(iii) 11
---
Operating segment total 901
Reconciliation to consolidated
operating income (loss):
Net effect from deferral of net
revenues and related cost of
sales (859)
Stock-based compensation
expense (37)
Restructuring 1
Amortization of intangible
assets and purchase price
accounting
related adjustments (77)
Impairment of intangible assets (326)
----
Consolidated operating (loss) $(397)
=====
Operating margin from total
operating segments 35%
Three Months Ended
------------------
December 31, 2009
-----------------
% of
Amount Total
------ -----
Segment net revenues:
Activision(i) $1,945 125%
Blizzard(ii) 329 21
Distribution(iii) 221 14
--- ---
Operating segment total 2,495 160
Reconciliation to consolidated
net revenues:
Net effect from deferral of net
revenues (938) (60)
---- ---
Consolidated net revenues $1,557 100%
====== ===
Segment income from operations:
Activision(i) $712
Blizzard(ii) 162
Distribution(iii) 10
---
Operating segment total 884
Reconciliation to consolidated
operating income (loss):
Net effect from deferral of net
revenues and related cost of
sales (724)
Stock-based compensation
expense (47)
Restructuring 6
Amortization of intangible
assets and purchase price
accounting
related adjustments (142)
Impairment of intangible assets (409)
----
Consolidated operating (loss) $(432)
=====
Operating margin from total
operating segments 35%
Three Months Ended
------------------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
Segment net revenues:
Activision(i) $(160) (8)%
Blizzard(ii) 241 73
Distribution(iii) (28) (13)
---
Operating segment total 53 2
Reconciliation to consolidated
net revenues:
Net effect from deferral of net
revenues
Consolidated net revenues (130) (8)
Segment income from operations:
Activision(i) (113) (16)
Blizzard(ii) 129 80
Distribution(iii) 1 10
---
Operating segment total 17 2
Reconciliation to consolidated
operating income (loss):
Net effect from deferral of net
revenues and related cost of
sales
Stock-based compensation
expense
Restructuring
Amortization of intangible
assets and purchase price
accounting
related adjustments
Impairment of intangible assets
Consolidated operating (loss) $35 (8)%
Operating margin from total
operating segments
Year Ended
----------
December 31, 2010
-----------------
% of
Amount Total
------ -----
Segment net revenues:
Activision(i) $2,769 62%
Blizzard(ii) 1,656 37
Distribution(iii) 378 9
--- ---
Operating segment total 4,803 108
Reconciliation to consolidated
net revenues:
Net effect from deferral of net
revenues (356) (8)
Other(iv) --- ---
--- ---
Consolidated net revenues $4,447 100%
====== ===
Segment income from operations:
Activision(i) $511
Blizzard(ii) 850
Distribution(iii) 10
---
Operating segment total 1,371
Reconciliation to consolidated
operating income (loss):
Net effect from deferral of net
revenues and related cost of
sales (319)
Stock-based compensation
expense (131)
Restructuring (3)
Amortization of intangible
assets and purchase price
accounting
related adjustments (123)
Impairment of intangible assets (326)
Integration and transactions
costs ---
Other(iv) ---
---
Consolidated operating income
(loss) $469
====
Operating margin from total
operating segments 29%
Year Ended
----------
December 31, 2009
-----------------
% of
Amount Total
------ -----
Segment net revenues:
Activision(i) $3,156 74%
Blizzard(ii) 1,196 28
Distribution(iii) 423 10
--- ---
Operating segment total 4,775 112
Reconciliation to consolidated
net revenues:
Net effect from deferral of net
revenues (497) (12)
Other(iv) 1 ---
--- ---
Consolidated net revenues $4,279 100%
====== ===
Segment income from operations:
Activision(i) $663
Blizzard(ii) 555
Distribution(iii) 16
---
Operating segment total 1,234
Reconciliation to consolidated
operating income (loss):
Net effect from deferral of net
revenues and related cost of
sales (383)
Stock-based compensation
expense (154)
Restructuring (23)
Amortization of intangible
assets and purchase price
accounting
related adjustments (259)
Impairment of intangible assets (409)
Integration and transactions
costs (24)
Other(iv) (8)
---
Consolidated operating income
(loss) $(26)
====
Operating margin from total
operating segments 26%
Year Ended
----------
%
$Increase Increase
(Decrease) (Decrease)
---------- ----------
Segment net revenues:
Activision(i) $(387) (12)%
Blizzard(ii) 460 38
Distribution(iii) (45) (11)
---
Operating segment total 28 1
Reconciliation to consolidated
net revenues:
Net effect from deferral of net
revenues
Other(iv)
Consolidated net revenues 168 4
Segment income from operations:
Activision(i) (152) (23)
Blizzard(ii) 295 53
Distribution(iii) (6) (38)
---
Operating segment total 137 11
Reconciliation to consolidated
operating income (loss):
Net effect from deferral of net
revenues and related cost of
sales
Stock-based compensation
expense
Restructuring
Amortization of intangible
assets and purchase price
accounting
related adjustments
Impairment of intangible assets
Integration and transactions
costs
Other(iv)
Consolidated operating income
(loss) $495 NM %
Operating margin from total
operating segments
(i) Activision Publishing ("Activision") - publishes interactive
entertainment products and contents.
(ii) Blizzard - Blizzard Entertainment, Inc. and its subsidiaries
("Blizzard") publishes PC games and online subscription-based games
in the MMORPG category.
(iii) Activision Blizzard Distribution ("Distribution") - distributes
interactive entertainment software and hardware products.
(iv) Other represents Non-Core activities, which are legacy Vivendi
Games' divisions or business units that we have exited, divested or
wound down as part of our restructuring and integration efforts as a
result of the Business Combination. Prior to July 1, 2009, Non-Core
activities were managed as a stand alone operating segment; however,
in light of the minimal activities and insignificance of Non-Core
activities, as of that date we ceased their management as a separate
operating segment and consequently, we are no longer providing
separate operating segment disclosure.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OUTLOOK
For the Quarter Ending March 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,
March 31, 2011 2011
-------------- -------------
Net Revenues (GAAP) $1,280 $3,950
Excluding the impact of:
------------------------
Change in deferred net revenues (a) (640) (50)
---- ---
Non-GAAP Net Revenues $640 $3,900
Earnings Per Diluted Share (GAAP) $0.28 $0.56
Excluding the impact of:
------------------------
Net effect from deferral in net
revenues and related cost of
sales (b) (0.26) 0.01
Stock-based compensation (c) 0.02 0.07
Amortization of intangible assets (d) - 0.03
Restructuring expenses (e) 0.03 0.03
Non-GAAP Earnings Per Diluted
Share $0.07 $0.70
(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.
SOURCE Activision Blizzard, Inc.
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