EX-99 3 ex99-1.txt EXHIBIT 99.1 - PRESS RELEASE Exhbiti 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 ACTIVISION ANNOUNCES SECOND QUARTER RESULTS Santa Monica, CA - November 6, 2003 - Activision, Inc. (Nasdaq: ATVI) today announced financial results for the second fiscal quarter and the six-month period ended September 30, 2003. Net revenues were $117.5 million as compared to $169.2 million reported for the second quarter last fiscal year. Net loss for the second fiscal quarter was $10.1 million, or a loss per share of $0.11, compared with net income of $9.1 million, or $0.08 per diluted share, reported for the same period last year. The company's results were down year over year due to a significantly smaller release schedule. Net revenues for the six-month period ended September 30, 2003, were $276.2 million, as compared to net revenues of $360.4 million reported for the six-month period of last fiscal year. Net loss for the six-month period ended September 30, 2003 was $5.9 million, or a loss per share of $0.07, compared with net income of $29.8 million, or $0.29 per diluted share, reported for the same period last year. Ron Doornink, President of Activision said, "we had a light release schedule for the second quarter, however, our main focus for this fiscal year remains our third quarter releases - Tony Hawk's Underground(TM), True Crime(TM): Streets of L.A.(TM), Call of Duty(TM) and Empires: Dawn of the Modern World(TM), which represent some of the strongest, most innovative games in our company's history. Overall our competitive position remains strong as we continue to make progress with our quality enhancement initiatives. Business Highlights During the quarter, the company shipped Disney's Extreme Skate Adventure for the PlayStation 2 computer entertainment system, Xbox video game console and Nintendo(R)GameCube(TM) and Game Boy(R) Advance, Cabela's(R) Deer Hunt 2004 Season(TM) for the PlayStation 2 computer entertainment system and Xbox video game console and LucasArts Entertainment's Jedi Knight: Jedi Academy(TM) for the PC which Activision developed and publishes in Europe. Activision's quarterly results were driven by newly released titles, as well as solid performance of the company's catalog franchises including Spider-Man(TM), Tony Hawk's Pro Skater(TM) and Return to Castle Wolfenstein(TM). On October 30, 2003, Activision announced that it had exercised its option to acquire the remaining 70% of outstanding common stock in Infinity Ward, the developer of Activision's highly acclaimed PC game, Call of Duty. Activision's product slate for the remainder of fiscal year 2004 includes the recently released Tony Hawk's Underground, for the PlayStation 2 computer entertainment system, Xbox video game console, GameCube and Game Boy Advance, which is being supported by the biggest marketing and advertising campaign in Activision's history; the highly anticipated True Crime: Streets of L.A., for the PlayStation 2 computer entertainment system, Xbox video game console and GameCube platform, which garnered more pre-orders than any game in the company's history; and Call of Duty, which received a 93 rating by industry leading PC Gamer Magazine and Empires: Dawn of the Modern World(TM) for the PC. Titles slated for release after the holiday season include MTX: Mototrax(TM) for the PlayStation 2 computer entertainment system, Xbox video game console and GameCube, Pitfall(TM) for the PlayStation 2 computer entertainment system, Xbox video game console, GameCube and Game Boy Advance and Tencho(R) Return from Darkness(TM) for the Xbox video game console. Activision also announced that the company is modifying its full fiscal year 2004 and third and fourth quarter outlook. The company is raising its outlook for net revenue for the full fiscal year by $30 million to $780 million, while at the same time it is moving Doom 3 into its next fiscal year for planning purposes. However, the company is taking a one-time, pre-tax charge of approximately $23 million in the third quarter related to product cancellations including the previously announced titles Trinity(TM), Shaun Palmer's Pro Snowboarder 2(TM) and the sequel to Street Hoop's(TM). The after-tax effect of this change amounts to approximately $0.16 per diluted share. The company's previously provided outlook for fiscal year 2004 earnings per diluted share was $0.47. The company now expects earnings per diluted share of $0.34 for the fiscal year ending March 31, 2004, which includes the charge. The company is raising its outlook for third quarter net revenue of $390 million and expects earnings per diluted share of $0.45, which includes the one-time charge. For the fourth quarter, the company expects net revenues of $114 million and a loss per share of $0.05. Doornink added, "The video game market is increasingly dominated by high-quality products based on recognizable franchises supported with big marketing programs. We have decided to take steps to align our business with the continuing evolution of the video game market. Specifically, we have canceled the development of 10 games, which we believe are unlikely to produce an acceptable level of return on our investment. This will enable us to focus and increase our development and marketing resources on those franchises with the greatest potential. We believe that this realignment will enhance our position to capitalize on the opportunities presented by the growing mass-market installed base of hardware platforms. Activision's fiscal year 2005 game slate includes Spider-Man 2(TM), Shrek 2(TM), DOOM 3(TM), Lemony Snicket's: A Series of Unfortunate Events(TM), Dreamworks' A Shark's Tale(TM), Call of Duty(TM): Finest Hour(TM), Vampire(R) The Masquerade - Bloodlines(TM), Rome: Total War(TM), Peter Molyneux's The Movies(TM) and X-Men(TM): Legends(TM). 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 $864 million for the fiscal year ended March 31, 2003. Activision maintains operations in the U.S., Canada, the United Kingdom, France, Germany, 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. Although the company believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, a number of important factors could cause our 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. (Tables to Follow) ACTIVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except earnings per share data) Six months Quarter ended September 30, ended September 30, 2003 2002 2003 2002 Restated Restated ---------- ------------ ----------- ----------- Net revenues $ 117,523 $ 169,172 $ 276,248 $ 360,430 Costs and expenses: Cost of sales - product costs 72,391 80,779 149,001 164,123 Cost of sales - software royalties and amortization 11,397 18,055 26,895 33,893 Cost of sales - intellectual property licenses 7,401 5,143 17,544 17,786 Product development 15,894 13,259 29,474 25,010 Sales and marketing 17,237 28,776 43,522 50,769 General and administrative 10,136 11,826 21,599 26,319 ---------- ------------ ----------- ----------- Total operating expenses 134,456 157,838 288,035 317,900 Operating income (loss) (16,933) 11,334 (11,787) 42,530 Investment income, net 1,404 2,865 2,661 4,021 Income (loss) before provision (benefit) for income taxes (15,529) 14,199 (9,126) 46,551 Provision (benefit) for income taxes (5,436) 5,113 (3,196) 16,761 ---------- ------------ ----------- ----------- Net income (loss) $ (10,093) $ 9,086 $ (5,930) $ 29,790 ========== ========== ========== =========== Basic earnings (loss) per share $ (0.11) $ 0.09 $ (0.07) $ 0.31 Weighted average common shares outstanding 88,162 100,172 88,105 94,587 Diluted earnings (loss) per share $ (0.11) $ 0.08 $ (0.07) $ 0.29 Weighted average common shares outstanding assuming dilution 88,162 108,731 88,105 103,916 Share and earnings per share data have been restated to reflect our three-for-two stock split for shareholders of record as of May 16, 2003, paid June 6, 2003. ACTIVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, March 31, 2003 2003 ------------- ------------- ASSETS Current assets: Cash, cash equivalents and short-term investments $ 411,436 $ 406,954 Accounts receivable, net 29,502 15,822 Inventories 21,163 19,577 Software development 63,109 26,791 Intellectual property licenses 17,239 8,906 Deferred income taxes 32,375 38,290 Other current assets 23,099 10,565 ------------- ------------- Total current assets 597,923 526,905 ============= ============= Software development 23,665 35,281 Intellectual property licenses 24,987 36,943 Property and equipment, net 26,562 22,265 Deferred income taxes 20,300 10,322 Other assets 1,893 5,081 Goodwill 67,726 68,019 ------------- ------------- Total assets $ 763,056 $ 704,816 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ - $ 147 Accounts payable 49,015 45,602 Accrued expenses 49,947 58,656 ------------- ------------- Total current liabilities 98,962 104,405 Long-term debt, less current portion - 2,671 ------------- ------------- Total liabilities 98,962 107,076 Shareholders' equity: Common stock - - Additional paid-in capital 681,233 592,295 Retained earnings 124,634 130,564 Treasury stock (142,946) (121,685) Accumulated other comprehensive loss 1,173 (3,434) ------------- ------------- Total shareholders' equity 664,094 597,740 Total liabilities and shareholders' equity $ 763,056 $ 704,816 ============= =============
ACTIVISION, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Quarter and Six Months Ended September 30, 2003 and 2002 (Amounts in thousands) Percent Increase Quarter Ended (Decrease) September 30, 2003 September 30, 2002 Amount % of Total Amount % of Total Geographic Revenue Mix United States $ 46,450 40% $ 93,298 55% -50% International 71,073 60% 75,874 45% -6% ------------ ---- ----------- ----- ----- Total net revenues $ 117,523 100% $ 169,172 100% -31% Activity/Platform Mix Publishing: Console $ 46,019 64% $ 83,766 66% -45% Hand-held 4,187 6% 14,797 12% -72% PC 21,590 30% 28,535 22% -24% ------------ ---- ----------- ----- ----- Total publishing $ 71,796 61% $ 127,098 75% -44% Distribution: Console $ 33,188 73% $ 33,600 80% -1% Hand-held 4,730 10% 3,141 7% 51% PC 7,809 17% 5,333 13% 46% ------------ ---- ----------- ----- ----- Total distribution $ 45,727 39% $ 42,074 25% 9% ------------ ---- ----------- ----- ----- Total net revenues $ 117,523 100% $ 169,172 100% -31% Percent Increase Six Months Ended (Decrease) September 30, 2003 September 30, 2002 Amount % of Total Amount % of Total Geographic Revenue Mix United States $ 129,189 47% $ 200,402 56% -36% International 147,059 53% 160,028 44% -8% ------------ ---- ----------- ----- ----- Total net revenues $ 276,248 100% $ 360,430 100% -23% Activity/Platform Mix Publishing: Console $ 134,503 72% $ 197,926 71% -32% Hand-held 8,783 5% 25,487 9% -66% PC 42,915 23% 56,830 20% -24% ------------ ---- ----------- ----- ----- Total publishing $ 186,201 67% $ 280,243 78% -34% Distribution: Console $ 68,530 76% $ 63,706 80% 8% Hand-held 7,642 9% 5,740 7% 33% PC 13,875 15% 10,741 13% 29% ------------ ---- ----------- ----- ----- Total distribution $ 90,047 33% $ 80,187 22% 12% ------------ ---- ----------- ----- ----- Total net revenues $ 279,248 100% $ 360,430 100% -23% ============ ==== =========== ===== =====
ACTIVISION, INC. AND SUBSIDIARIES FINANCIAL INFORMATION For the Quarter and Six Months Ended September 30, 2003 and 2002 Quarter Ended Quarter Ended Six Months Ended Year Ended September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 Publishing Net Revenues PC 30% 22% 23% 20% ----------------------------------- ----------- ------------ ---------- ---------- Console 64% 66% 72% 71% ----------------------------------- ----------- ------------ ---------- ---------- PlayStation 2 32% 37% 35% 36% Microsoft Xbox 18% 12% 26% 12% PlayStation 10% 9% 6% 7% Nintendo GameCube 4% 5% 5% 15% Nintendo 64 0% 3% 0% 1% Hand-held 6% 12% 5% 9% ----------------------------------- ----------- ------------ ---------- ---------- Game Boy Advance 5% 11% 5% 8% Game Boy Color 1% 1% 0% 1% ----------------------------------- ----------- ------------ ---------- ---------- Total publishing net revenues 100% 100% 100% 100% ====================================== =========== ============ ========== ==========