Current Report
Delaware 0-12699 95-4803544
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
(c) Exhibits.
99.1 Press Release of Activision, Inc., dated July 21, 2004.
On July 21, 2004, Activision, Inc. issued a press release announcing its financial results for the fiscal quarter ended June 30, 2004. The press release is attached hereto as Exhibit 99.1.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
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.
Date: July 21, 2004
By:/s/ Ronald Doornink
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Name: Ronald Doornink
Title: President
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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
- Net Revenues Hit Q1 All Time High, Rising 33% Year Over Year - - Company Increases Q2 and Fiscal 2005 Net Revenues and E.P.S. Outlook - - FY 2005 Earnings Per Diluted Share Outlook Up 28% Year Over Year -
Santa Monica, CA - July 21, 2004 - Activision, Inc. (Nasdaq: ATVI) today announced financial results for the first fiscal quarter ended June 30, 2004.
Net revenues were $211.3 million as compared to net revenues of $158.7 million reported for the first quarter last fiscal year. Net income for the first fiscal quarter was $12.0 million, an increase of $7.8 million, as compared with net income of $4.2 million for the previous first quarter. Earnings per diluted share were $0.08, an increase of $0.05, as compared with $0.03 per diluted share reported for the same period last year.
Robert A. Kotick, Chairman and CEO of Activision, stated, "In addition to delivering record net revenues for the first quarter, we also significantly increased our earnings. Both Shrek 2(TM) and Spider-Man 2(TM) were top-selling titles, and as of today, the two titles combined have shipped more than five million units. In the past nine months, all five games created by our internal development studios have each shipped more than one million units, with three shipping more than three million units."
Activision Announces Q1 FY 2005 Results
Kotick continued, "Our focus on big propositions is yielding superb results and we intend to continue leveraging our increasing portfolio of franchises. For the balance of this year and next year, our production strategy centers around developing games based on proven, predictable brands. This strategy should enable us to grow our revenues, earnings and operating margin, and increase our return on invested capital as we have over the past few years. As we look toward the future, Activision will also selectively develop groundbreaking original content, as we did last year with the introductions of True Crime: Streets of L.A.(TM) and Call of Duty(TM)."
Business Highlights
Activision's results were driven by strong global consumer response to its
products across all platforms. During the quarter, the company released Shrek
2(TM) and Spider-Man 2(TM) for the PlayStation(R) 2 computer entertainment
system, Xbox(R)video game system, Nintendo(R) GameCube(TM), Nintendo Game Boy(R)
Advance and the PC and True Crime: Streets of L.A.(TM) for the PC.
Other highlights include:
o Today, Activision announced that one of its wholly owned studios, Neversoft, the creators behind the Tony Hawk franchise, is in development on a compelling new intellectual property that will bring Neversoft's world renowned development prowess to a new genre. The unnamed title is slated for release in fiscal 2006, alongside a new game based on the Tony Hawk franchise that Neversoft will also develop for fiscal 2006.
o According to NPD TRSTS, Spider-Man 2 was the #1 best-selling video game in the U.S. across all platforms for the month of June. Additionally, Shrek 2 was the #1 best-selling title across all platforms for the month of May and the #2 game behind Spider-Man 2 in June.
o On July 16, Activision Value Publishing, announced a multi-year alliance with Discovery Consumer Products to develop and distribute video games based on the popular television series American Chopper.
Activision Announces Q1 FY 2005 Results
o On July 14, Activision confirmed that id Software's highly anticipated DOOM 3(TM) for the PC has entered manufacturing and will begin shipping to retail stores worldwide the week of August 2.
o On July 7, Activision announced that the company's North American Publishing unit has shipped more than two million units of its Spider-Man 2 video game timed to the theatrical release of Sony Pictures Entertainment's Columbia Pictures "Spider-Man(R) 2".
o On April 8, Activision announced that it had partnered with Nielsen Entertainment to develop a new initiative that will allow video game companies to supply advertisers with audience measurement metrics to help them assess the impact of in-game ad exposure. The new initiative will provide tools for advertisers to effectively measure everything from ad exposure to demographics to audience recall when it comes to video game use.
Activision also increased its outlook for fiscal 2005. For the second quarter, the company expects net revenues of $254 million and earnings per diluted share of $0.08. For the third quarter, it expects net revenues of $515 million and earnings per diluted share of $0.52. For the fourth quarter, Activision expects net revenues of $120 million and earnings per diluted share of $0.01. For the full fiscal year, the company expects net revenues of $1.10 billion and earnings per diluted share of $0.69. The company's previous fiscal year outlook was $1.05 billion in net revenues and earnings per diluted share of $0.64. The company's revised outlook represents a 16% increase in net revenues and a 28% increase in earnings per diluted share year over year.
Looking ahead to the second quarter, Activision's slate will be driven by Doom 3(TM) and Rome: Total War(TM), two of the most anticipated PC games of the year; Call of Duty: United Offensive(TM), the expansion pack to the best-selling, critically acclaimed PC title Call of Duty; DreamWork's Shark Tale(TM), for the PlayStation 2 computer entertainment system, Xbox video game system, Nintendo GameCube, Nintendo Game Boy Advance and the PC; and X-Men Legends(TM) for the PlayStation 2 computer entertainment system, Xbox video game system and Nintendo GameCube.
Today at 4:30 p.m. EDT, Activision's management will host a conference call and Webcast to discuss its Q1 fiscal year 2005 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 (719) 457-2617 in the U.S.
Activision Announces Q1 FY 2005 Results
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 $948 million for the fiscal year ended March 31, 2004.
Activision maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Italy, 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Quarter ended June 30,
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2004 2003
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Restated
Net revenues $ 211,276 $ 158,725
Costs and expenses:
Cost of sales - product costs 89,088 76,610
Cost of sales - software royalties and 12,283 15,498
amortization
Cost of sales - intellectual property 17,648 10,143
licenses
Product development 21,105 13,580
Sales and marketing 41,734 26,285
General and administrative 13,685 11,463
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Total operating expenses 195,543 153,579
Operating income 15,733 5,146
Investment income, net 2,112 1,257
Income before provision for income taxes 17,845 6,403
Provision for income taxes 5,888 2,240
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Net income $ 11,957 $ 4,163
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Basic earnings per share $ 0.09 $ 0.03
Weighted average common shares outstanding 137,765 132,069
Diluted earnings per share $ 0.08 $ 0.03
Weighted average common shares outstanding
assuming dilution 153,407 140,655
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Share and earnings per share data have been restated to reflect our three-for-two stock split for shareholders of record as of February 23, 2004, paid March 15, 2004.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, March 31,
2004 2004
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ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 539,146 $ 587,649
Accounts receivable, net 123,048 62,577
Inventories 39,635 26,427
Software development 75,696 58,320
Intellectual property licenses 15,159 32,115
Deferred income taxes 23,497 26,127
Other current assets 21,184 18,660
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Total current assets 837,365 811,875
Software development 21,660 28,386
Intellectual property licenses 17,630 16,380
Property and equipment, net 24,841 25,539
Deferred income taxes 6,666 9,064
Other assets 1,243 1,080
Goodwill 76,436 76,493
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Total assets $ 985,841 $ 968,817
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 75,558 72,874
Accrued expenses 56,534 63,205
Total current liabilities 132,092 136,079
Shareholders' equity:
Common stock - -
Additional paid-in capital 770,257 758,626
Retained earnings 220,236 208,279
Treasury stock (144,128) (144,128)
Accumulated other comprehensive income 7,384 9,961
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Total shareholders' equity 853,749 832,738
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Total liabilities and shareholders' equity $ 985,841 $ 968,817
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FINANCIAL INFORMATION
For the Quarter Ended June 30, 2004 and 2003
(Amounts in thousands)
Percent
Increase
Quarter Ended (Decrease)
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June 30, 2004 June 30, 2003
Amount % of Total Amount % of Total
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Geographic Revenue Mix
United States $125,191 59% $ 82,739 52% 51%
International 86,085 41% 75,986 48% 13%
-------- ---- -------- ---- ----
Total net revenues $211,276 100% $158,725 100% 33%
Activity/Platform Mix
Publishing:
Console $119,127 74% $ 88,484 77% 35%
Hand-held 18,430 11% 4,596 4% 301%
PC 24,095 15% 21,325 19% 13%
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Total publishing $161,652 77% $114,405 72% 41%
Distribution:
Console $ 39,194 79% $ 35,342 80% 11%
Hand-held 3,655 7% 2,912 6% 26%
PC 6,775 14% 6,066 14% 12%
-------- ---- -------- ---- ----
Total distribution $ 49,624 23% $ 44,320 28% 12%
-------- ---- -------- ---- ----
Total net revenues $211,276 100% $158,725 100% 33%
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FINANCIAL INFORMATION
For the Quarter Ended June 30, 2004 and 2003
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Quarter Ended Quarter Ended
June 30, 2004 Jun3 30, 2003
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Publishing Net Revenues
PC 15% 19%
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Console 74% 77%
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PlayStation 2 42% 37%
Microsoft Xbox 16% 31%
Nintendo GameCube 15% 5%
PlayStation 1% 4%
Hand-held 11% 4%
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Game Boy Advance 11% 4%
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Total publishing net revenues 100% 100%
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End of Filing
