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Activision Blizzard Announces September Quarter Results

- September Quarter Net Revenues and EPS Exceed Prior Outlook -
- Company Reaffirms Full Year 2008 Outlook -
- Company's Board of Directors Authorizes $1 Billion Stock Repurchase Program -

SANTA MONICA, Calif., Nov 05, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced September quarter financial results.

For the quarter ended September 30, 2008, Activision Blizzard's GAAP net revenues were $711 million. Excluding the impact of change in deferred net revenues ($12 million) and net revenues from Activision Blizzard's non-core exit operations ($6 million), the company's non-GAAP net revenues were $717 million. Including Activision's stand-alone net revenues of $53 million for July 1 - July 9, 2008, the company's non-GAAP comparable-basis net revenues were $770 million. The company's prior non-GAAP net revenue outlook was $620 million.

Activision Blizzard's GAAP operating loss for the quarter was $194 million. Excluding the impact of the change in deferred net revenues and cost of sales ($12 million), the impact of equity-based compensation expense ($26 million), Activision Blizzard's non-core exit operations loss ($110 million), one-time costs related to the business combination with Vivendi Games ($78 million), and the amortization of intangibles and the changes in costs of sales resulting from purchase price accounting adjustments ($90 million), Activision Blizzard's non-GAAP operating income was $122 million. Including Activision's stand-alone non-GAAP operating loss of $9 million for July 1 - July 9, 2008, the Company's non-GAAP comparable-basis operating income was $113 million.

For the quarter, Activision Blizzard's split-adjusted GAAP loss per share was $0.08. Excluding the impact of the change in deferred net revenues and cost of sales ($0.01 per share), the impact of equity-based compensation expense ($0.01 per share), Activision Blizzard's non-core exit operations loss ($0.05 per share), one-time costs related to the business combination with Vivendi Games ($0.04 per share), and the amortization of intangibles and the changes in costs of sales resulting from purchase price accounting adjustments ($0.04 per share), Activision Blizzard's non-GAAP split-adjusted earnings per diluted share were $0.07. The company's prior non-GAAP split-adjusted earnings per diluted share outlook was $0.04.

Separately, Activision Blizzard also announced that its Board of Directors has authorized a stock repurchase program under which the company can repurchase up to $1 billion of the company's common stock.

Robert Kotick, CEO of Activision Blizzard, stated, "For our first quarter as a combined company, Activision Blizzard's financial results were higher than the outlook we provided on our last earnings call, both on a GAAP and non-GAAP basis. Our performance was driven by continued strong worldwide sales of Call of Duty(R) 4: Modern Warfare(TM), Guitar Hero(R): Aerosmith(R) and Guitar Hero(R): On Tour(TM), Blizzard Entertainment(R)'s World of Warcraft(R) and the international release of LucasArts' Star Wars(TM): The Force Unleashed(TM)."

Kotick continued, "In the December quarter, we will launch our strongest holiday slate ever, which is based on some of the best-selling franchises in the industry. We are excited about our holiday releases, which are all based on proven franchises, and will deliver our entire slate on schedule with strong product quality on our key titles. However, we remain cautious given the likely slowdown in consumer spending this holiday season."

"As a result of our strong momentum through the first 9 months of the year and our solid holiday slate, we are reaffirming our full year non-GAAP outlook of $4.9 billion in revenues and $1.2 billion in operating income. We also announced a $1 billion share repurchase program which illustrates our confidence in the long-term growth of the company and our commitment to providing superior returns to our shareholders," Kotick added.

Business Highlights

-- For the September quarter, Activision Blizzard had two of the top-10 titles in dollars on all console platforms in the U.S., according to The NPD Group.

-- For the September quarter, Activision Blizzard was the #1 third-party publisher on the Nintendo DS, according to The NPD Group.

-- For the September quarter, Guitar Hero: On Tour was the #1 best-selling title overall in North America for the Nintendo DS, according to The NPD Group.

-- For the September quarter, Activision Blizzard had two of the top-five PC titles worldwide -- Blizzard Entertainment's World of Warcraft: Battle Chest(R) and Call of Duty 4: Modern Warfare, according to Charttrack, Gfk and The NPD Group.

-- For the first nine months of the calendar year, Guitar Hero remained the #1 best-selling franchise in U.S. on all console platforms, according to the NPD Group.

-- On July 9, 2008, Vivendi Games, Inc. and Activision, Inc. completed the transaction, announced on December 2, 2007 to create Activision Blizzard as the world's most profitable pure-play online and console game publisher. Activision Blizzard was formed by combining Activision, Inc., one of the world's leading independent publishers of interactive entertainment, and Vivendi Games, Inc., Vivendi's interactive entertainment business, which includes Blizzard Entertainment's World of Warcraft, the world's #1 subscription-based massively multiplayer online role-playing game ("MMORPG").

-- On August 12, 2008, Blizzard Entertainment, Inc. and NetEase.com, Inc. announced an agreement to license Blizzard Entertainment's StarCraft(R) II, Warcraft(R) III: Reign of Chaos(TM), Warcraft III: The Frozen Throne(TM), and Battle.net(R) platform, which provides online multiplayer services for these games, to Shanghai EaseNet Network Technology Limited, an affiliated company of NetEase.com, Inc. Blizzard Entertainment and NetEase also established a joint venture, which will provide support for the operation of the licensed games and Battle.net platform in China.

-- On September 8, 2008, Activision Blizzard completed a two-for-one stock split.

-- On September 12, 2008, Activision Publishing acquired FreeStyle Games, a premier U.K. based video game developer specializing in music-based games.

-- On October 28, 2008, Blizzard Entertainment, Inc. announced that the subscribership for World of Warcraft, its award-winning MMORPG, exceeded 11 million players worldwide.

Company Outlook

For the December quarter, Blizzard Entertainment expects to release Wrath of the Lich King(TM), World of Warcraft's second expansion pack, and Activision Publishing expects to release a full slate of titles, including Guitar Hero(R) World Tour(TM), Guitar Hero(R): On Tour Decades(TM), Call of Duty(R): World at War(TM), Quantum of Solace(TM), Spider-Man(TM): Web of Shadows, Madagascar: Escape 2 Africa(TM) Video Game, Crash Bandicoot(R): Mind Over Mutant, Spyro(TM): Dawn of the Dragon, Kung Fu Panda: Legendary Warriors (TM), TRANSFORMERS Animated: The Game and Tony Hawk's Motion.

Activision Blizzard continues to expect that online functionality for certain key titles to be released in the December quarter, and thereafter, will become a significant component of game play for certain platforms and that the company will have continuing performance obligations beyond the sale of the game for these titles. As a result, the company expects to begin recognizing a substantial amount of net revenues and costs of sales from these online-enabled games over the estimated service period.

Revenues related to the sale of World of Warcraft boxed software, including the sale of expansion packs and other ancillary revenues will continue to be deferred and recognized ratably over the estimated customer life beginning upon activation of the software and delivery of the services.

As a result of the above, Activision Blizzard anticipates that a considerable amount of net revenues and costs of sales that would have been recognized in the December quarter will be recognized in calendar year 2009. While this will not impact the economics of Activision Blizzard's business or its cash flows, these changes will have a material impact on the company's calendar 2008 GAAP results.

In order to provide comparable year-over-year performance information, Activision Blizzard's non-GAAP results will exclude the impact of the change in deferred net revenues and cost of sales related to those online-enabled key titles on certain platforms, and will also exclude deferred revenues and costs related to the MMORPG platform for World of Warcraft.

Additionally, in calendar 2008, in order to provide comparable operating performance information for the core operations of Activision Blizzard, the company's non-GAAP results also exclude: the impact of expenses related to equity-based compensation costs; Activision Blizzard's non-core exit operations, which is the operating results of products and operations from the historical Vivendi Games, Inc. businesses that the company has begun to exit or wind down; one-time costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and restructuring activities); the amortization of intangibles and the increase in the fair value of inventories and the associated changes in cost of sales resulting from purchase price accounting adjustments from the business combination; and the associated tax benefits.

For the December quarter 2008, Activision Blizzard expects GAAP net revenues of $1.6 billion, and GAAP loss per share of $0.01. Excluding the impact of change in deferred net revenues ($569 million), and net revenues from Activision Blizzard's non-core exit operations ($2 million), the company expects non-GAAP net revenues of $2.2 billion.

Excluding the impact of the change in deferred net revenues and cost of sales ($0.17 per share), equity-based compensation expense ($0.02 per share), Activision Blizzard's non-core exit operations ($0.01 per share), one-time costs related to the business combination with Vivendi Games, Inc. ($0.01 per share), and the amortization of intangibles and the changes in costs of sales resulting from purchase price accounting adjustments ($0.09 per share), Activision Blizzard expects non-GAAP earnings per diluted share of $0.29 for the December quarter.

Stock Repurchase Program

Under Activision Blizzard's stock repurchase program, shares may be purchased as determined by the company from time to time on the open market or in private transactions, including structured or accelerated transactions. The timing and amount of share repurchases under the program will be determined by the company based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time.

The repurchase program will be funded using the company's working capital. Any repurchased shares will be available for use in connection with the company's stock plans and for other corporate purposes.

Conference Call

Today at 4:30 p.m. EST, Activision Blizzard's management will host a conference call and Webcast to discuss Activision Blizzard's results for the quarter ended September 30, 2008 and management's outlook for the remainder of the calendar year. The company welcomes all members of the financial and media communities and other interested parties to visit the "Investor Relations" area of http://www.activisionblizzard.com to listen to the conference call via live Webcast or to listen to the call live by dialing into 719-325-4871 in the U.S.

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 impact of the change in deferred net revenues and costs of sales; the impact of expenses related to equity-based compensation costs; Activision Blizzard's non-core exit operations (which is the operating results of products and operations from the historical Vivendi Games, Inc. businesses that the company has begun to exit or wind down); one-time costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and restructuring activities); the amortization of intangibles and the increase in the fair value of inventories and the associated changes in cost of sales resulting from purchase price accounting adjustments from the business combination; and the associated tax benefits. These adjustments have the effect of increasing non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share and non-GAAP operating margin (and reducing non-GAAP net loss and non-GAAP loss per share) by the same amounts as compared with GAAP net revenues, GAAP net income (loss), GAAP earnings (loss) per share and GAAP operating margin for the period.

As online functionality becomes a more important component of gameplay, the company expects that certain of Activision Blizzard's non-subscription based online-enabled games to be released in the December quarter will contain a more-than-inconsequential separate service deliverable in addition to the product, and its performance obligations for these games will extend beyond the sale of the games. Vendor-specific objective evidence of fair value will not exist for the online services, as the company does not plan to separately charge for this component of online-enabled games.

As a result, for certain key titles to be released in the December quarter of 2008 and thereafter, the company will recognize all of the revenues from the sale of certain of Activision's online-enabled games for certain platforms ratably over the estimated service period. In addition, the company will defer the costs of sales of those titles to match revenues. As a consequence, the company's non-GAAP results will exclude the impact of the change in deferred revenues and costs of sales related to certain of Activision's online-enabled games for certain of the Microsoft, Sony, Nintendo and PC platforms in order to provide comparable year-over-year performance.

Revenues related to the sale of World of Warcraft boxed software, including the sale of expansion packs and other ancillary revenues will continue to be deferred and recognized ratably over the estimated customer life beginning upon activation of the software and delivery of the services. Activision Blizzard recognizes that there are limitations associated with the use of these non-GAAP financial measures as they do not reflect net revenues, net income (loss), earnings (loss) per share and operating margin as determined in accordance with GAAP, and may reduce comparability with other companies that calculate similar non-GAAP measures differently.

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of these 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, net revenues, net income (loss), earnings (loss) per share and operating margin directly ahead of non-GAAP net revenues, non-GAAP net income (loss), non-GAAP earnings (loss) per share, and non-GAAP operating margin, and by providing a reconciliation which indicates and describes the adjustments made.

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. Management further believes that reflecting the use of non-GAAP measures that eliminate the impact of deferred revenues and costs of sales in its operating results is important when evaluating Activision Blizzard's operating performance, and when planning, forecasting and analyzing future periods.

Management also believes that non-GAAP measures that exclude Activision Blizzard's non-core exit operations, one-time costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and the costs associated with restructuring activities), the amortization of intangibles and the increase in the fair value of inventories and the associated changes in cost of sales resulting from purchase price accounting adjustments from the business combination, provides a better comparison to prior periods in which Activision, Inc. and Vivendi Games, Inc. were operating as stand-alone companies, and the resulting effects arising from the business combination does not affect the on-going economics of the combined entity. Management believes the use of these non-GAAP financial measures helps investors to better understand the 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.

These 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.

These 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 (loss), non-GAAP earnings (loss) per share, 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.

Comparable-Basis Presentation by Segment -- Non-GAAP Comparable Measures

On July 9, 2008, the business combination between Activision, Inc. and Vivendi Games, Inc. was consummated. As a result of the consummation of the business combination, Activision, Inc. was renamed Activision Blizzard, Inc.

For accounting purposes, because the business combination resulted in Vivendi obtaining control of Activision, Inc. through the acquisition of a majority of common stock of Activision, Inc., the business combination is treated as a "reverse acquisition," with Vivendi Games, Inc. deemed to be the accounting acquirer. As a result, the historical financial statements of Activision Blizzard, Inc. prior to July 9, 2008 are those of Vivendi Games, Inc. and the results of Activision, Inc. prior to July 9, 2008 are not included as part of Activision Blizzard, Inc.'s historical financial statements.

As one means of analyzing Activision Blizzard, Inc.'s performance, the company presents data that combines: (1) the company's results after July 9, 2008, (2) Vivendi Games, Inc.'s results prior to July 9, 2008 and (3) Activision, Inc.'s results prior to July 9, 2008. Management uses information prepared on this comparable basis internally to compare results and believes that this presentation provides investors with additional useful information to understand the company's performance on a year-over-year comparable basis. However, the data is not presented in accordance with GAAP and is not presented in accordance with Article 11 of Regulation S-X relating to pro forma financial statements. The non-GAAP information presented should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.

The following data is presented in the attachments to this press release:

-- Non-GAAP Comparable Basis Segment Net Revenues for the three and nine months ended September 30, 2007 and 2008

-- Non-GAAP Comparable Basis Segment Operating Income (Loss) for the three and nine months ended September 30, 2007 and 2008

In conjunction with the business combination, Activision Blizzard, Inc. changed the manner in which senior management assesses the operating performance of, and allocates resources to, its operating segments. As a result, the company now operates in four segments:

i. Activision Publishing ("Activision") -- which consists of the historical business of Activision, Inc. publishing interactive entertainment software and peripherals, and certain studios, assets, and titles previously included in Vivendi Games' historical "Sierra" operating segment;

ii. Blizzard -- which consists of the business of Blizzard Entertainment, Inc. and its subsidiaries publishing traditional games and online subscription-based games in the MMORPG category;

iii. Distribution -- which consists of the distribution of interactive entertainment software and hardware products; and

iv. Activision Blizzard's non-core exit operations ("Non-Core") -- which consists of legacy divisions or business units that the company has begun to exit or wind down as part of our restructuring and integration efforts as a result of the business combination.

Activision, Blizzard and Distribution are referred to collectively as Activision Blizzard Inc.'s core operations ("Core").

With respect to periods prior to July 9, 2008, results for historical Activision, Inc. are reported in the Activision and Distribution segments. In addition, as a result of the change in operating and reporting segments, all prior period segment information has been restated to conform to this new financial statement presentation.

About Activision Blizzard

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online, PC, console and handheld game publisher with leading market positions across every major category 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, Norway, Denmark, the Netherlands, Romania, Australia, Chile, India, Russia, Japan, South Korea, China and the region of Taiwan. More information about Activision Blizzard and its products can be found on the company's website, http://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 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," "remains," "to be," "plans," "believes," "may," "expects," "intends," 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, shifts in consumer spending trends, the impact of the current macroeconomic environment, the seasonal and cyclical nature of the interactive game market, Activision Blizzard's ability to predict consumer preferences among competing hardware platforms (including next-generation hardware), declines in software pricing, product returns and price protection, product delays, retail acceptance of Activision Blizzard's products, adoption rate and availability of new hardware and related software, industry competition, rapid changes in technology and industry standards, protection of proprietary rights, litigation against Activision Blizzard, maintenance of relationships with key personnel, customers, vendors and third-party developers, domestic and international economic, financial and political conditions and policies, foreign exchange rates, integration of recent acquisitions and the identification of suitable future acquisition opportunities, Activision Blizzard's success in integrating the operations of Activision and Vivendi Games in a timely manner, or at all, and the combined Company's ability to realize the anticipated benefits and synergies of the transaction to the extent, or in the timeframe, anticipated, and the other factors identified in the risk factors section of Activision Blizzard's quarterly report on Form 10-Q for the June 30, 2008 quarter. 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.

Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Activision Blizzard and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

                              (Tables to Follow)



     ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     (In millions, except earnings (loss) per share data)


                                    Quarter ended       Nine months ended
                                     September 30,         September 30,
                                   2008        2007*      2008       2007*
                               (Unaudited) (Unaudited)(Unaudited) (Unaudited)

    Net revenues:
       Product sales               $413        $98        $553       $246
       Subscription, licensing
        and other revenues          298        228         834        650
            Total net revenues     $711       $326      $1,387       $896

    Costs and expenses:
       Cost of sales - product
        costs                       279         31         350         95
       Cost of sales - software
        royalties and amortization   50          5          88         14
       Cost of sales - intellectual
        property licenses            36          1          45          5
       Cost of sales - massively
        multi-play online game
        ("MMOG")                     43         40         123        146
       Product development          200        117         414        327
       Sales and marketing          142         46         220        105
       Restructuring costs           61          -          61         (1)
       General and administrative    94         29         172         71
            Total costs and
             expenses               905        269       1,473        762
    Operating income (loss)        (194)        57         (86)       134
    Investment income, net           24         (2)         28         (5)
    Income (loss) before income tax
     provision (benefit)           (170)        55         (58)       129
    Income tax provision (benefit)  (62)         7         (22)       (12)
    Net income (loss)             $(108)       $48        $(36)      $141


    Basic loss per share         $(0.08)     $0.08      $(0.04)     $0.24
    Weighted average common shares
     outstanding                  1,271        591         816        591

    Diluted loss per share       $(0.08)     $0.08      $(0.04)     $0.24
    Weighted average common shares
     outstanding assuming
     dilution                     1,271        591         816        591


     *On July 9, 2008, a business combination (the "Business Combination") by
     and among Activision, Inc., Sego Merger Corporation, a wholly-owned
     subsidiary of Activision, Inc., Vivendi S.A. ("Vivendi"), VGAC LLC, a
     wholly-owned subsidiary of Vivendi ("VGAC") and Vivendi Games, Inc., a
     wholly-owned subsidiary of VGAC ("Vivendi Games" or "VG") was
     consummated.  As a result of the consummation of the Business
     Combination, Activision, Inc. was renamed Activision Blizzard, Inc.

     For accounting purposes, because the Business Combination resulted in
     Vivendi obtaining control of Activision, Inc. through the
     acquisition of a majority of common stock of Activision, Inc., the
     Business Combination is treated as a "reverse acquisition," with Vivendi
     Games deemed to be the acquirer.  As a result, (i) the historical
     financial statements of the company prior to July 9, 2008 are those of
     Vivendi Games, Inc. and (ii) the results of Activision, Inc. prior to
     July 9, 2008 are not included as part of the company's historical
     financial statements.

     Further, earnings per share for periods prior to the Business Combination
     are retrospectively adjusted to reflect the number of split adjusted
     shares received by Vivendi, former parent of Vivendi Games, Inc.



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In millions)
                                           September 30,     December 31,
                                               2008             2007*
    ASSETS                                  (Unaudited)
        Current assets:
           Cash and cash equivalents           $2,842             $62
           Short-term investments                  94               3
           Accounts receivable, net               316             104
           Inventories                            377              21
           Software development                   226              25
           Intellectual property
            licenses                               10               9
           Deferred income taxes                  228             143
           Intangible assets, net                  51               -
           Other current assets                    57              23
                Total current assets            4,201             390
        Long-term investments                      86               -
        Software development                       20              51
        Intellectual property licenses              -               8
        Property and equipment, net               168             129
        Deferred income taxes                      80              24
        Other assets                               21               6
        Intangible assets, net                  1,462               7
        Trade name                                433              53
        Goodwill                                7,270             203
                       Total assets           $13,741            $871

    LIABILITIES AND SHAREHOLDERS' EQUITY
        Current liabilities:
           Accounts payable                      $338             $49
           Deferred revenues                      206             197
           Accrued expenses and other
            liabilities                           557             274
                Total current
                 liabilities                    1,101             520
           Deferred income tax                    696             -
           Other liabilities                      169             111
                       Total liabilities        1,966             631

        Shareholders' equity:
           Common stock                             -               -
           Additional paid-in capital          12,165             490
           Net payable to Vivendi
            and affiliated companies                -              77
           Retained earnings
            (accumulated deficit)                (403)           (367)
           Accumulated other
            comprehensive income                   13              40
                Total shareholders'
                 equity                        11,775             240
                      Total liabilities
                       and shareholders'
                       equity                 $13,741            $871


     *On July 9, 2008, a business combination (the "Business Combination") by
     and among Activision, Inc., Sego Merger Corporation, a wholly-owned
     subsidiary of Activision, Inc., Vivendi S.A. ("Vivendi"), VGAC LLC, a
     wholly-owned subsidiary of Vivendi ("VGAC") and Vivendi Games, Inc., a
     wholly-owned subsidiary of VGAC ("Vivendi Games" or "VG") was
     consummated.  As a result of the consummation of the Business
     Combination, Activision, Inc. was renamed Activision Blizzard, Inc.

     For accounting purposes, because the Business Combination resulted in
     Vivendi obtaining control of Activision, Inc. through the
     acquisition of a majority of common stock of Activision, Inc., the
     Business Combination is treated as a "reverse acquisition," with Vivendi
     Games deemed to be the acquirer.  As a result, (i) the historical
     financial statements of the company prior to July 9, 2008 are those of
     Vivendi Games, Inc. and (ii) the results of Activision, Inc. prior to
     July 9, 2008 are not included as part of the company's historical
     financial statements.

     Further, earnings per share for periods prior to the Business Combination
     are retrospectively adjusted to reflect the number of split adjusted
     shares received by Vivendi, former parent of Vivendi Games, Inc.



     ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
     RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
     (In millions, except earnings (loss) per share data)

                                             Cost of
                                    Cost      Sales-        Cost
                                     of     Software      of Sales-     Cost
                                   Sales-   Royalties   Intellectual     of
                             Net   Product     and        property     Sales-
                          Revenues  costs   Amortization  licenses      MMOG
    Quarter ended September
     30, 2008
     GAAP Measurement       $711   $279        $50          $36         $43
      Less: Changes in
            deferred
            net revenues
            and cost
            of sales      (a) 12      0          -            -           -
      Less: Equity-based
            compensation
            (including
            purchase price
            accounting
            related
            adjustments)  (b)  -      -          -            -           0
      Less: Results of
            Activision
            Blizzard's
            non-core exit
            operations    (c) (6)    (1)        (1)          (0)         (0)
      Less: One time
            costs related
            to the
            Vivendi
            transaction,
            integration
            and
            restructuring (d)  -      -          -            -           -
      Less: Amortization
            of intangibles
            and purchase
            price
            accounting
            related
            adjustments   (e)  -     (8)       (24)         (22)          -

     Non-GAAP Measurement   $717   $270        $25          $14         $43

                                                  General              Total
                                        Sales       and                Costs
                             Product    and       Adminis-  Restruct-   and
                           Development Marketing  trative   uring     Expenses
    Quarter ended September
     30, 2008
     GAAP Measurement           $200      $142      $94       $61       $905
      Less: Changes in
            deferred
            net revenues
            and cost of
            sales         (a)      -         -        -         -          0
      Less: Equity-based
            compensation
            (including
            purchase price
            accounting
            related
            adjustments)  (b)     (7)       (4)     (15)        -        (26)
      Less: Results of
            Activision
            Blizzard's
            non-core exit
            operations    (c)    (91)      (12)     (11)        -       (116)
      Less: One time costs
            related to the
            Vivendi
            transaction,
            integration
            and
            restructuring (d)      -         -      (17)      (61)       (78)
      Less: Amortization
            of intangibles
            and purchase
            price
            accounting
            related
            adjustments   (e)      -       (36)      (1)        -        (90)

     Non-GAAP Measurement       $102       $91      $49        $-       $595


                                                          Basic       Diluted
                                     Operating   Net     Earnings     Earnings
                                       Income   Income    (Loss)      (Loss)
     Quarter ended September 30, 2008  (Loss)   (Loss)   per Share   per Share
     GAAP Measurement                  $(194)   $(108)    (0.08)       (0.08)
          Less: Changes in
                deferred
                net revenues and
                cost of sales (a)         12        7      0.01         0.01
          Less: Equity-based
                compensation
                (including
                purchase price
                accounting
                related
                adjustments)  (b)         26       16      0.01         0.01
          Less: Results of
                Activision
                Blizzard's
                non-core exit
                operations    (c)        110       67      0.05         0.05
          Less: One time costs
                related to the
                Vivendi
                transaction,
                integration
                and
                restructuring (d)         78       56      0.04         0.04
          Less: Amortization of
                intangibles and
                purchase price
                accounting
                related
                adjustments   (e)         90       54      0.04         0.04

     Non-GAAP Measurement               $122      $92      0.07         0.07

     (a) Reflects the net change in deferred net revenues and deferred cost of
     sales.
     (b) Includes expense related to employee stock options, employee stock
     purchase plan and restricted stock rights under Statement of Financial
     Accounting Standards No. 123 (revised 2004), "Share-Based Payment."
     (c) Reflects the results of products and operations from the historical
     Vivendi Games businesses that the company has begun to exit or wind down.
     (d) Includes one-time 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.
     (e) Reflects amortization of intangible assets, and the increase in the
     fair value of inventories and associated cost of sales, all of which
     relate to purchase price accounting related adjustments.

     See explanation above regarding the Company's practice on reporting
     non-GAAP financial measures. 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.



     ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
     RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
     (In millions, except earnings (loss) per share data)

                                             Cost of
                                    Cost      Sales-        Cost
                                     of     Software      of Sales-     Cost
                                   Sales-   Royalties   Intellectual     of
                             Net   Product     and        property     Sales-
                          Revenues  costs   Amortization  licenses      MMOG
    Quarter ended September
     30, 2007
    GAAP Measurement         $326    $31        $5           $1         $40
     Less: Changes in
           deferred
           net revenues
           and cost of
           sales         (a)  (31)    (3)        -            -           -
     Less: Equity-based
           compensation
           (including
           purchase
           price
           accounting
           related
           adjustments)  (b)    -     (1)        -            -           -
     Less: Results of
           Activision
           Blizzard's
           non-core
           exit
           operations    (c)   (3)     -        (1)           -           -
     Less: One time
           costs
           related to
           the Vivendi
           transaction,
           integration
           and
           restructuring (d)    -      -         -            -           -
     Less: Amortization of
           intangibles and
           purchase price
           accounting
           related
           adjustments   (e)    -      -        (1)           -           -

    Non-GAAP Measurement     $292    $27        $3           $1         $40


                                                  General              Total
                                        Sales       and                Costs
                             Product    and       Adminis-  Restruct-   and
                           Development Marketing  trative   uring     Expenses
    Quarter ended September
     30, 2007
    GAAP Measurement            $117       $46       $29       $-       $269
     Less: Changes in
           deferred net
           revenues and
           cost of sales (a)       -         -         -        -         (3)
     Less: Equity-based
           compensation
           (including
           purchase price
           accounting
           related
           adjustments)  (b)     (35)       (3)       (3)       -        (42)
     Less: Results of
           Activision
           Blizzard's
           non-core exit
           operations    (c)     (23)      (10)       (9)       2        (41)
     Less: One time costs
           related to
           the Vivendi
           transaction,
           integration
           and
           restructuring (d)       -         -         -       (2)        (2)
     Less: Amortization
           of intangibles
           and purchase
           price accounting
           related
           adjustments   (e)       -         -         -        -         (1)

    Non-GAAP Measurement         $59       $33       $17       $-       $180



                                                          Basic       Diluted
                                     Operating   Net     Earnings     Earnings
                                       Income   Income    (Loss)      (Loss)
    Quarter ended September 30, 2007   (Loss)   (Loss)   per Share   per Share
    GAAP Measurement                     $57      $48      $0.08       $0.08
          Less: Changes in
                deferred net
                revenues and
                cost of sales  (a)       (28)     (17)     (0.03)      (0.03)
          Less: Equity-based
                compensation
                (including
                purchase price
                accounting
                related
                adjustments)   (b)        42       25       0.04        0.04
          Less: Results of
                Activision
                Blizzard's
                non-core exit
                operations     (c)        38       22       0.04        0.04
          Less: One time
                costs
                related to
                the Vivendi
                transaction,
                integration
                and
                restructuring  (d)         2        1       0.00        0.00
          Less: Amortization of
                intangibles and
                purchase price
                accounting
                related
                adjustments    (e)         1        1       0.00        0.00

    Non-GAAP Measurement                $112      $80      $0.14       $0.14


     (a) Reflects the net change in deferred net revenues and deferred cost of
     sales.
     (b) Includes expense related to employee stock options, employee stock
     purchase plan and restricted stock rights under Statement of Financial
     Accounting Standards No. 123 (revised 2004), "Share-Based Payment."
     (c) Reflects the results of products and operations from the historical
     Vivendi Games businesses that the company has begun to exit or wind down.
     (d) Includes one-time 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.
     (e) Reflects amortization of intangible assets, and the increase in the
     fair value of inventories and associated cost of sales, all of which
     relate to purchase price accounting related adjustments.

     See explanation above regarding the Company's practice on reporting
     non-GAAP financial measures. 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.



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    FINANCIAL INFORMATION
    For the Quarter Ended September 30, 2008
    (Amounts in millions)

                                        Quarter Ended
                                 September 30,   September 30,
                                     2008            2007         Percent
                                         % of            % of    Increase
                                Amount   Total   Amount  Total  (Decrease)
    Geographic Revenue Mix
      North America               $295     41%    $147     45%      101%
      Europe                       348     49%     122     37%      185%
      Asia Pacific                  62      9%      54     17%       15%
      Total core operations net
       revenues                   $705     99%    $323     99%      118%

      Non-core operations           $6      1%      $3      1%      100%
      Total consolidated net
       revenues                   $711    100%    $326    100%      118%

    Segment/Platform Mix
    Activision and Blizzard:
      MMOG                        $271     38%    $269     83%        1%
      Console                      272     38%      16      5%     1600%
      Hand-held                     81     11%       7      2%     1057%
      PC                            25      4%      31      9%      -19%
      Total Activision and
       Blizzard net revenues      $649     91%    $323     99%      101%

      Total distribution net
       revenues                    $56      8%      $-      0%        0%
      Total net revenues core
       operations                 $705     99%    $323     99%      118%

      Non-core operations           $6      1%      $3      1%      100%
      Total consolidated net
       revenues                   $711    100%    $326    100%      118%


                                      Nine Months Ended
                                 September 30,   September 30,
                                     2008            2007         Percent
                                         % of            % of    Increase
                                Amount   Total   Amount  Total  (Decrease)
    Geographic Revenue Mix
      North America               $591     43%    $422     47%       40%
      Europe                       627     45%     374     42%       68%
      Asia Pacific                 153     11%      91     10%       68%
      Total core operations
       net revenues             $1,371     99%    $887     99%       55%

      Non-core operations          $16      1%      $9      1%       78%
      Total consolidated net
       revenues                 $1,387    100%    $896    100%       55%

    Segment/Platform Mix
    Activision and Blizzard:
      MMOG                        $828     60%    $746     83%       11%
      Console                      335     24%      53      6%      532%
      Hand-held                    102      7%      21      2%      386%
      PC                            50      4%      67      8%      -25%
      Total Activision and
       Blizzard net revenues    $1,315     95%    $887     99%       48%

      Total distribution net
       revenues                    $56      4%      $-      0%        0%
      Total net revenues core
       operations               $1,371     99%    $887     99%       55%

      Non-core operations          $16      1%      $9      1%       78%
      Total consolidated net
       revenues                 $1,387    100%    $896    100%       55%



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    FINANCIAL INFORMATION
    For the Quarter Ended September 30, 2008

                                                            Nine       Nine
                                    Quarter    Quarter     Months     Months
                                     Ended      Ended      Ended      Ended
                                  September   September  September  September
                                   30, 2008    30, 2007   30, 2008  30, 2007

    Activision & Blizzard Net Revenues

       MMOG                            42%        84%        63%        84%

       PC                               4%         9%         4%         8%

       Console                         42%         5%        26%         6%
          Sony PlayStation 3            9%         0%         6%         1%
          Sony PlayStation 2            9%         4%         6%         3%
          Microsoft Xbox 360           11%         0%         7%         1%
          Nintendo Wii                 13%         1%         7%         1%
          Other                         0%         0%         0%         0%

       Hand-held                       12%         2%         7%         2%
          Sony PlayStation Portable     2%         1%         1%         1%
          Nintendo Dual Screen         10%         1%         6%         1%
          Nintendo Game Boy Advance     0%         0%         0%         0%

       Total Activision & Blizzard net
        revenues                      100%       100%       100%       100%



      ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
      For the nine months ended September 30, 2008 and 2007
      GAAP to non-GAAP reconciliations
      Segment Information - Comparable Basis Segment Operating Income (Loss)
      (amounts in millions)

                                                                      Segments
     Nine months ended                                                 total/
      September 30, 2008                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment operating
      income(loss) (VG
      Jan. 1-Sept 30,
      Activision July
      10-Sept 30)         (61)        447          3      389    (251)   138

     Reconciliation to
      GAAP consolidated
      operating income
      (loss)
       - Net effect from
         deferral of net
         revenues and
         cost of sales                                                    (7)
       - Stock-based
         compensation                                                    (47)
       - Restructuring
         expenses                                                        (61)
       - Amortization of
         intangible assets
         and purchase
         price accounting
         related adjustments                                             (92)
       - Integration and
         transaction costs                                               (17)

     Consolidated operating
      income(loss) (GAAP)                                                (86)

    Comparable Presentation
     Adjustments:
     Including Activision,
     Inc. prior periods from
     July 1 to July 9,
     2008
     Segment operating
      income (loss)       (10)          -          1       (9)            (9)
     Reconciliation to
      consolidated
      operating income
      (loss)
       - Stock-based
         compensation                                                     (3)
       - Integration and
         transaction
         costs                                                           (38)
      Consolidated operating
       income(loss)                                                      (50)

     Including Activision,
      Inc. prior periods
      for the six months
      ended June 30, 2008
     Segment operating
      income(loss)        172           -          4      176            176
     Reconciliation to
      consolidated
      operating income
      (loss)
       - Stock-based
         compensation                                                    (29)
       - Integration
         and transaction
         costs                                                           (12)
      Consolidated operating
       income(loss)                                                      135

    Non-GAAP Comparable
     Basis Segment
     Operating Income
     (Loss)               101         447          8      556


                                                                      Segments
     Nine months ended                                                 total/
      September 30, 2007                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment operating
      income(loss) (VG
      only)               (79)        447          -      368     (86)   282

     Reconciliation to
      GAAP consolidated
      operating
      income(loss)
       - Net effect from
         deferral of net
         revenues and
         cost of sales                                                   (67)
       - Stock-based
         compensation                                                    (77)
       - Amortization of
         intangible assets
         and purchase
         price accounting
         related
         adjustments                                                      (3)
       - Restructuring
         expenses                                                         (1)

     Consolidated operating
      income(loss) (GAAP)                                                134

    Comparable Presentation
     Adjustment:
     Including Activision,
      Inc. prior periods
      for the nine months
      ended September 30,
      2007
     Segment operating
      income(loss)         13           -          1       14             14
     Reconciliation to
      consolidated
      operating
      income(loss)
       - Stock-based
         compensation                                                    (22)
      Consolidated
       operating
       income(loss)                                                       (9)

     Non-GAAP Comparable
      Basis Segment
      Operating Income
      (Loss)              (66)        447          1      382
     - Change in
       comparable
       basis -- nine
       months ended
       September 30,
       '08 vs. '07                                         46%

     (i) Activision Publishing ("Activision") -- which consists of the
     historical business of Activision, Inc. publishing interactive
     entertainment software and peripherals, and certain studios, assets, and
     titles previously included in Vivendi Games' historical "Sierra"
     operating segment.
     (ii) Blizzard -- which consists of the business of Blizzard
     Entertainment, Inc. and its subsidiaries publishing of traditional games
     and online subscription-based games in the MMOG category.
     (iii) Distribution -- which consists of the distribution of interactive
     entertainment software and hardware products.
     (iv) Activision, Blizzard and Distribution are referred to collectively
     as Activision Blizzard Inc.'s core operations ("Core").
     (v) Activision Blizzard's non-core exit operations ("Non-Core") -- which
     consists of legacy divisions or business units that the company has begun
     to exit or wind down as part of our restructuring and integration efforts
     as a result of the business combination.



      ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
      For the three months ended September 30, 2008 and 2007
      GAAP to non-GAAP reconciliations
      Segment Information - Comparable Basis Segment Operating Income (Loss)
      (amounts in millions)
                                                                      Segments
     Three months ended                                                total/
      September 30, 2008                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment operating
      income(loss) (VG
      July 1-Sept 30,
      Activision July
      10-Sept 30)         (26)        146          2      122    (110)    12

     Reconciliation to
      GAAP consolidated
      operating
      income(loss)
       - Net effect
         from deferral
         of net
         revenues and
         cost of sales                                                   (12)
       - Stock-based
         compensation                                                    (26)
       - Restructuring
         expenses                                                        (61)
       - Amortization of
         intangible assets
         and purchase
         price accounting
         related adjustments                                             (90)
       - Integration and
         transaction costs                                               (17)

     Consolidated operating
      income(loss) (GAAP)                                               (194)

    Comparable Presentation
     Adjustment:
     Including Activision,
      Inc. prior periods
      from July 1 to
      July 9, 2008
     Segment operating
      income(loss)        (10)          -          1       (9)            (9)
     Reconciliation to
      consolidated
      operating income
      (loss)
       - Stock-based
         compensation                                                     (3)
       - Integration and
         transaction costs                                               (38)
     Consolidated
      operating
      income(loss)                                                       (50)

     Non-GAAP Comparable
      Basis Segment
      Operating Income
      (Loss)              (36)        146          3      113

                                                                      Segments
     Three months ended                                                total/
      September 30, 2007                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment operating
      income(loss) (VG
      only)               (19)        132          -      113     (40)    73

     Reconciliation to
      GAAP consolidated
      operating income
      (loss)
       - Net effect from
         deferral of net
         revenues and cost
         of sales                                                         28
       - Stock-based
         compensation                                                    (43)
       - Amortization of
         intangible assets
         and purchase price
         accounting related
         adjustments                                                      (1)

     Consolidated operating
      income(loss) (GAAP)                                                 57

    Comparable Presentation
     Adjustment:
     Including Activision,
      Inc. prior periods for
      the three months ended
      September 30, 2007
     Segment operating
      income(loss)         (3)          -          -       (3)            (3)
     Reconciliation to
      consolidated
      operating income
      (loss)
       - Stock-based
        compensation                                                      (7)
      Consolidated
       operating
       income(loss)                                                      (10)

    Non-GAAP Comparable
     Basis Segment
     Operating Income
     (Loss)               (22)        132          -      110
   - Change in
     comparable
     basis -- three
     months ended
     September 30,
     '08 vs. '07                                            3%

     (i) Activision Publishing ("Activision") -- which consists of the
     historical business of Activision, Inc. publishing interactive
     entertainment software and peripherals, and certain studios, assets, and
     titles previously included in Vivendi Games' historical "Sierra"
     operating segment.
     (ii) Blizzard -- which consists of the business of Blizzard
     Entertainment, Inc. and its subsidiaries publishing of traditional games
     and online subscription-based games in the MMOG category.
     (iii) Distribution -- which consists of the distribution of interactive
     entertainment software and hardware products.
     (iv) Activision, Blizzard and Distribution are referred to collectively
     as Activision Blizzard Inc.'s core operations ("Core").
     (v) Activision Blizzard's non-core exit operations ("Non-Core") -- which
     consists of legacy divisions or business units that the company has begun
     to exit or wind down as part of our restructuring and integration efforts
     as a result of the business combination.



     ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
     For the nine months ended September 30, 2008 and 2007
     GAAP to non-GAAP reconciliations
     Segment Information - Comparable Basis Segment Net Revenues (amounts in
     millions)

                                                                      Segments
     Nine months ended                                                 total/
      September 30, 2008                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment net
      revenues (VG
      Jan 1-Sept 30,
      Activision July
      10-Sept 30)        457         866        56       1,379   16     1,395

     Reconciliation
      to GAAP
      consolidated net
      revenues
       - Net effect
         from deferral
         of net
         revenues                                                          (8)

     Consolidated net
      revenues (GAAP)                                                   1,387

    Comparable Presentation
     Adjustments:
     Including Activision,
      Inc. prior periods
      from July 1 to
      July 9, 2008
         Segment net
          revenues        35           -        18          53

    Including Activision,
     Inc. prior periods
     for the six months
     June 30, 2008
         Segment net
          revenues     1,092           -       165       1,257


    Non-GAAP Comparable
     Basis Segment
     Net Revenues      1,584         866       239       2,689


                                                                      Segments
    Nine months ended                                                  total/
     September 30, 2007                     Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment net
      revenues (VG
      only)              108         856         -         964      9    973

     Reconciliation to
      GAAP consolidated
      net revenues
       - Net effect from
         deferral of
         net revenues                                                    (77)

     Consolidated net
      revenues (GAAP)                                                    896

    Comparable Presentation
     Adjustment:
     Including Activision,
      Inc. prior periods
      for the nine months
      ended September
      30, 2007
         Segment net
          revenues       892           -       234       1,126

    Non-GAAP Comparable
     Basis Segment Net
     Revenues          1,000         856       234       2,090
    - Change in
      comparable basis
      -- nine months
      ended September
      30, '08 vs. '07                                       29%

     (i) Activision Publishing ("Activision") -- which consists of the
     historical business of Activision, Inc. publishing interactive
     entertainment software and peripherals, and certain studios, assets, and
     titles previously included in Vivendi Games' historical "Sierra"
     operating segment.
     (ii) Blizzard -- which consists of the business of Blizzard
     Entertainment, Inc. and its subsidiaries publishing of traditional games
     and online subscription-based games in the MMOG category.
     (iii) Distribution -- which consists of the distribution of interactive
     entertainment software and hardware products.
     (iv) Activision, Blizzard and Distribution are referred to collectively
     as Activision Blizzard Inc.'s core operations ("Core").
     (v) Activision Blizzard's non-core exit operations ("Non-Core") --
     which consists of legacy divisions or business units that the company has
     begun to exit or wind down as part of our restructuring and integration
     efforts as a result of the business combination.



      ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
      For the three months ended September 30, 2008 and 2007
      GAAP to non-GAAP reconciliations
      Segment Information - Comparable Basis Net Revenues (amounts in
      millions)
                                                                      Segments
     Three months ended                                                total/
      September 30, 2008                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment net
      revenues (VG
      July 1-Sept 30,
      Activision July
      10-Sept 30)         364         297         56      717       6    723

     Reconciliation
      to GAAP
      consolidated
      net revenues
       - Net effect from
         deferral of
         net revenues                                                    (12)

     Consolidated net
      revenues (GAAP)                                                    711

    Comparable
     Presentation
     Adjustment:
     Including Activision,
      Inc. prior periods
      from July 1 to
      July 9, 2008
         Segment net
          revenues         35           -         18       53

    Non-GAAP Comparable
     Basis Segment
     Net Revenues         399         297         74      770

                                                                      Segments
     Three months ended                                                total/
      September 30, 2007                    Distribu-           Non-   Conso-
                  Activision(i) Blizzard(ii) tion(iii) Core(iv)Core(v) lidated

     Segment net
      revenues (VG
      only)                43         249          -      292       3    295

     Reconciliation to
      GAAP consolidated
      net revenues
       - Net effect from
         deferral of
         net revenues                                                     31

     Consolidated net
      revenues (GAAP)                                                    326

    Comparable Presentation
     Adjustment:
     Including Activision,
      Inc. prior periods
      for the three months
      ended September 30,
      2007
         Segment net
          revenues        254           -         64      318

    Non-GAAP Comparable
     Basis Segment
     Net Revenues         297         249         64      610
    - Change in
      comparable
      basis -- three
      months ended
      September 30,
      '08 vs. '07                                          26%

     (i) Activision Publishing ("Activision") -- which consists of the
     historical business of Activision, Inc. publishing interactive
     entertainment software and peripherals, and certain studios, assets, and
     titles previously included in Vivendi Games' historical "Sierra"
     operating segment.
     (ii) Blizzard -- which consists of the business of Blizzard
     Entertainment, Inc. and its subsidiaries publishing of traditional games
     and online subscription-based games in the MMOG category.
     (iii) Distribution -- which consists of the distribution of interactive
     entertainment software and hardware products.
     (iv) Activision, Blizzard and Distribution are referred to collectively
     as Activision Blizzard Inc.'s core operations ("Core").
     (v) Activision Blizzard's non-core exit operations ("Non-Core") --
     which consists of legacy divisions or business units that the company has
     begun to exit or wind down as part of our restructuring and integration
     efforts as a result of the business combination.


    Activision Blizzard Outlook
    For the quarter ending December 31, 2008
    GAAP to Non-GAAP reconciliation
    (in millions, except earnings
    (loss) per share data)                              Outlook for
                                                       Quarter Ending
                                                      December 31, 2008

    Net Revenues (GAAP)                                  $1,623.0

    Excluding the impacts of:
    Results of products and operations that
     the company has begun to exit or wind down              -2.0 (a)
    Change in deferred net revenues                         569.0 (b)

    Non-GAAP Net Revenues                                $2,190.0

    (Loss) Earnings Per Diluted Share (GAAP)               $(0.01)

    Excluding the impacts of:
    Change in deferred net revenues and cost of sales        0.17 (c)
    Equity based compensation (including purchase price
     accounting related adjustments)                         0.02 (d)
    Results of products and operations that the company
     has begun to exit or wind down                          0.01 (e)
    One time costs related to the Vivendi transaction,
     integration, and restructuring                          0.01 (f)
    Amortization of intangibles and purchase price
     accounting related adjustments                          0.09 (g)

    Non-GAAP Earnings Per Diluted Share                     $0.29

    (a) Reflects net revenues from the historical Vivendi Games products
        and businesses that the company has begun to exit or wind down.
    (b) Reflects the net change in deferred net revenues.
    (c) Reflects the net change in deferred net revenues and deferred
        cost of sales.
    (d) Reflects equity based compensation costs, including the increase
        in fair value associated with the historical Activision, Inc. stock
        awards as part of the purchase price accounting adjustments.
        Also includes the costs of the Blizzard Entertainment equity
        plan and Vivendi awards to historical Vivendi Games employees.
    (e) Reflects the results of products and operations from the
        historical Vivendi Games businesses that the company has begun to exit
        or wind down, and exit costs from the cancellation of projects.
    (f) Includes one-time costs related to the business combination with
        Vivendi Games (including transaction costs, integration costs, and
        restructuring activities). Restructuring activities includes severance
        cost and facility exit costs.
    (g) Reflects amortization of intangible assets, and the increase in
        the fair value of inventories and associated cost of sales, all of
        which relate to purchase price accounting related adjustments.

     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.

http://www.activision.com

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