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Activision Blizzard Reports Record December Quarter and Calendar Year 2008 Non-GAAP Comparable-Basis Results

-- December Quarter Performance Exceeds Non-GAAP Outlook - -- Company Expects Record Non-GAAP Operating Margin in CY 2009 -

SANTA MONICA, Calif., Feb 11, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Activision Blizzard, Inc. (Nasdaq: ATVI) today announced December quarter and calendar year financial results.

The company reports results on both a GAAP and a non-GAAP basis. Non-GAAP results exclude the impact of the change in deferred net revenues and related costs of sales; equity-based compensation expense; non-core exit operations; one-time costs related to the business combination with Vivendi Games; the amortization of intangibles and the changes in cost of sales resulting from purchase price accounting adjustments; and associated tax benefits. The company also reviews segment performance exclusive of the items noted above. Please refer to the tables at the back of this press release for a reconciliation of the company's GAAP and non-GAAP results by selected line items of the consolidated statement of operations and reconciliations of the company's GAAP segment performance and non-GAAP comparable basis performance.

For the quarter ended December 31, 2008, Activision Blizzard's GAAP net revenues were $1.6 billion and the company's non-GAAP net revenues were $2.3 billion. The company's prior non-GAAP net revenues outlook was $2.2 billion.

For the quarter ended December 31, 2008, Activision Blizzard recorded a GAAP operating loss of $148 million. The company's non-GAAP operating income was $644 million for the quarter, the highest in the company's history.

For the quarter ended December 31, 2008, Activision Blizzard had a GAAP net loss of $72 million, or a GAAP loss per diluted share of $0.05. The company had non-GAAP net income of $429 million and non-GAAP earnings per diluted share of $0.31. The company's prior non-GAAP earnings per diluted share outlook was $0.29.

For the calendar year, Activision Blizzard's GAAP net revenues were $3.0 billion. The company's segment net revenues from core operations were $3.7 billion. Including Activision's stand-alone net revenues of $1.3 billion for the pre-acquisition period of January 1 - July 9, 2008, the company's non-GAAP comparable-basis net revenues were $5.0 billion, the highest in the company's history. The company's prior non-GAAP comparable-basis net revenues outlook was $4.9 billion.

Activision Blizzard's GAAP operating loss for the calendar year 2008 was $0.2 billion. The company's segment operating income from Activision Blizzard's core operations was $1.0 billion. Including Activision's pre-acquisition stand-alone segment operating income of $0.2 billion for January 1 - July 9, 2008, the company's non-GAAP comparable-basis operating income was $1.2 billion, which is inline with the company's prior outlook.

Robert Kotick, CEO of Activision Blizzard, stated, "Activision Blizzard has delivered record December quarter and calendar year 2008 non-GAAP comparable-basis results. On a non-GAAP comparable basis, Activision Blizzard has finished the calendar year as the largest and most profitable third-party publisher with more than $5 billion of net revenues. These results exceeded the calendar 2009 financial goals that we outlined over a year ago -- when we announced the planned combination of Activision and Blizzard -- of $4.3 billion of non-GAAP net revenues and non-GAAP operating income of $1.1 billion. We achieved these results one full year ahead of our original plan. Our balance sheet remains strong with no debt and more than $3 billion in cash."

Kotick continued, "In 2008, we had four of the top-10 best-selling games worldwide for the year. Ninety percent of the top-ten best-selling games worldwide were based on proven franchises, validating our strategy of a focused product slate with high-quality titles based on well-established brands. We enter 2009 with the finest product slate in our company's history and an organization properly sized and resourced to compete alongside the many new entrants and existing competitors in our industry. During the year, we will continue to employ our proven strategies that have worked so well for us over the last decade."

Kotick added, "During the year, we successfully achieved our merger restructuring goals, including the elimination of unprofitable product lines, right sizing our organization and integrating disparate accounting and IT systems, all with minimal disruption to our business. The success of our merger integration coupled with the strength of our product lineup should enable us to once again deliver record, industry-leading non-GAAP margins in 2009. All of our accomplishments reflect the effort, imagination and intellectual and creative talents of the people who work here. We are well poised to continue generating future shareholder value, as we have for the past 17 years."

Business Highlights

In North America and Europe, for the calendar year, Activision Blizzard had two of the top-five best-selling franchises on the consoles across all platforms -- Guitar Hero and Call of Duty, and was the #1 third-party publisher for the Wii platform, according to The NPD Group, Charttrack and Gfk. Additionally, Blizzard Entertainment's World of Warcraft(R): Wrath of the Lich King(TM) was the #1 PC title in North America and Europe for the calendar year.

    --  Activision Blizzard had four top 10-best selling PC titles in dollars in
        North America and Europe for the calendar year, according to The NPD
        Group, Charttrack and Gfk.
    --  In North America, Activision Blizzard was the #1 third-party console and
        handheld software publisher in dollars for the calendar year, according
        to The NPD Group.
    --  For the calendar year, Activision Blizzard had the #1 U.S. best-selling
        title in dollars on the Nintendo(R) DS, Guitar Hero(R) On Tour(TM),
        according to the NPD Group.
    --  For the December quarter, Activision Blizzard was the #1 console,
        handheld and PC publisher in the U.S. and Europe, according to The NPD
        Group, Charttrack and Gfk.
    --  During the December quarter, Guitar Hero(R) III: Legends of Rock(TM)
        became the first video game ever to surpass $1 billion in sales from a
        single title, according to The NPD Group, Charttrack and Gfk.
    --  For the December quarter, Activision Blizzard had the #1 and #2
        best-selling console titles, Guitar Hero(R)World Tour(TM) and Call of
        Duty(R)World at War(TM) respectively, in dollars in North America and
        Europe, according to The NPD Group.
    --  On December 23, 2008 Blizzard Entertainment, Inc. announced that World
        of Warcraft(R) its award-winning subscription-based massively
        multiplayer online role-playing game, is now played by more than 11.5
        million subscribers worldwide.
    --  On November 10, 2008 -Activision Publishing acquired video game
        developer Budcat Creations, an award-winning development studio with
        expertise on the Wii(TM) home video game system and the Nintendo(R)
        DS(TM).
    --  On November 5, 2008, Activision Blizzard 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.  Under this authorization the company purchased $126 million, or
        approximately 13 million shares, of common stock at an average price of
        $9.68 per share.

Company Outlook

For the March quarter of calendar year 2009, Activision Publishing expects to release two titles during the last week of March, Guitar Hero(R) Metallica(R) and Monsters vs. Aliens(TM). Guitar Hero(R) Metallica enables players to experience the intensity and skill of Metallica, one of the greatest heavy metal bands of all time, as well as 20 other bands hand-picked by Metallica for their influence on the band's music. The game will be released for the Xbox 360(TM) video game system from Microsoft, PlayStation3 computer entertainment system and Nintendo Wii . Additionally, the company will release Monsters vs. Aliens(TM), based on DreamWorks Animation's upcoming 3D movie, for the PlayStation 2 computer entertainment system, PlayStation 3 computer entertainment system, Xbox 360 video game system from Microsoft, Nintendo Wii, Nintendo DS, and Games for Windows (TM) PC.

Due to current macroeconomic conditions, the company's outlook is subject to significant risks and uncertainties including declines in demand for the company's products, fluctuations in foreign exchange rates, and counterparty risks relating to customers, licensees, licensors and manufacturers. The company's outlook is also based on assumptions about sell through rates for the company's products, the new slate of products and progress in integrating operations following the company's recent business combination transaction. As a result of these and other factors, actual results may deviate materially from the outlook presented below.

For calendar 2009, Activision Blizzard expects GAAP net revenues of $4.2 billion, and GAAP earnings per diluted share of $0.22. On a non-GAAP basis, the company expects net revenues of $4.7 billion for the calendar year. The revenue outlook includes a reduction of more than $200 million in revenue from the company's lower margin distribution and the co-publishing businesses and a negative year-over-year impact of more than $400 million from a stronger dollar. On a constant exchange rate basis, however, the company expects another year of Non-GAAP revenue growth. The company's non-GAAP earnings per diluted share are expected to be $0.61 for the calendar year.

For the March quarter 2009, Activision Blizzard expects GAAP net revenues of $860 million, and GAAP earnings per diluted share of $0.08. On a non-GAAP basis, the company expects net revenues of $550 million and $0.03 earnings per diluted share for the March quarter.

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 and year ended December 31, 2008 and management's outlook for 2009. The company welcomes all members of the financial and media communities and other interested parties to visit the "Investor Relations" area of www.activisionblizzard.com to listen to the conference call via live Webcast or to listen to the call live by dialing into 719-325-4748 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 related costs of sales; 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 exited or is winding 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 associated changes in cost of sales resulting from purchase price accounting adjustments from the business combination; and the associated tax benefits.

As online functionality becomes a more important component of gameplay, certain of the company's online-enabled games for certain platforms contain a more-than-inconsequential separate service deliverable in addition to the product, and the company's performance obligations for these games extends beyond the sale of the games. Vendor-specific objective evidence of fair value does 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, the company recognizes all of the revenues from the sale of these games ratably over the estimated service period. In addition, the company defers the costs of sales of those titles to match revenues.

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

As a consequence, the company's non-GAAP results exclude the impact of the change in deferred revenues and related costs of sales related to certain of the company's online-enabled games for certain of the Microsoft, Sony, Nintendo and PC platforms and for World of Warcraft boxed software, including the sale of expansion packs and other ancillary revenues, in order to provide comparable year-over-year performance.

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 the change in deferred revenues and related 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 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, non-GAAP earnings 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 12
        months ended December 31, 2007 and 2008

    --  Non-GAAP Comparable Basis Segment Operating Income (Loss) for the three
        and 12 months ended December 31, 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 exited or is winding 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, www.activisionblizzard.com.

Cautionary Note Regarding Forward-looking Statements: Information in this press release that involves Activision Blizzard's expectations, plans, intentions or strategies regarding the future, including statements under the heading "Company Outlook," are forward-looking statements that are not facts and involve a number of risks and uncertainties. Activision Blizzard generally uses words such as "outlook," "will," "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, counterparty risks relating to customers, licensees, licensors and manufacturers, 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 reports on Form 10-Q for the June 30 and September 30, 2008 quarters. 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 December       Year ended
                                  31,                December 31,
                        ----------------------      -------------
                              2008         2007*        2008   2007*
                              ----         ----         ----   ----
                          (Unaudited)  (Unaudited)  (Unaudited)
                          -----------  -----------  -----------

    Net revenues:
      Product sales         $1,319         $211       $1,872   $457
      Subscription,
       licensing and
       other revenues          320          242        1,154    892
           Total net
            revenues         1,639          453        3,026  1,349
      --------------         -----          ---        -----  -----

    Costs and expenses:
      Cost of sales -
       product costs           805           74        1,160    171
      Cost of sales -
       software
       royalties and
       amortization            179           39          267     52
      Cost of sales -
       intellectual
       property
       licenses                174            4          219      9
      Cost of sales -
       massively multi-
       play online
       game ("MMOG")            53           45          193    204
      Product
       development             196          122          592    397
      Sales and
       marketing               244           67          464    172
      Restructuring
       costs                    32            -           93     (1)
      General and
       administrative          104           57          271    166
      ---------------          ---           --          ---    ---
           Total costs and
            expenses         1,787          408        3,259  1,170
    - --------------         -----          ---        -----  -----
    Operating income
     (loss)                   (148)          45         (233)   179
    Investment income
     (loss), net                18            1           46     (4)
    -----------------           --            -           --     --
    Income (loss)
     before income tax
     provision
     (benefit)                (130)          46         (187)   175
    Income tax benefit         (58)         (40)         (80)   (52)
    ------------------         ---          ---          ---    ---
    Net income (loss)         $(72)         $86        $(107)  $227
    =================         ====          ===        =====   ====


    --------------          ------        -----       ------  -----
    Basic earnings
     (loss) per share       $(0.05)       $0.15       $(0.11) $0.38
    Weighted average
     common shares
     outstanding             1,326          591          946    591
    ----------------         -----          ---          ---    ---


    --------------          ------        -----       ------  -----
    Diluted earnings
     (loss) per share       $(0.05)       $0.15       $(0.11) $0.38
    Weighted average
     common shares
     outstanding
     assuming dilution       1,326          591          946    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 equivalent shares
    received by Vivendi, former parent of Vivendi Games, Inc.



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In millions)
    -------------
                                             December 31,  December 31,
                                                2008          2007*
                                                ----          ----
    ASSETS                                   (Unaudited)
    ------                                   -----------
      Current assets:
        Cash and cash equivalents              $2,958           $62
        Short-term investments                     44             3
        Accounts receivable, net                1,210           112
        Inventories                               262            21
        Software development                      235            25
        Intellectual property licenses             35             9
        Deferred income taxes                     587           143
        Intangible assets, net                     14             -
        Other current assets                      201            23
        --------------------                      ---            --
             Total current assets               5,546           398
      - -------------------------               -----           ---
      Long-term investments                        78             -
      Software development                          1            51
      Intellectual property licenses                5             8
      Property and equipment, net                 149           129
      Deferred income taxes                        85            24
      Other assets                                 30             6
      Intangible assets, net                    1,283             7
      Trade name                                  433            53
      Goodwill                                  7,227           203
      --------                                  -----           ---
                       Total assets           $14,837          $879
      =============================           =======          ====


    LIABILITIES AND SHAREHOLDERS' EQUITY
    ------------------------------------
      Current liabilities:
        Accounts payable                         $555           $49
        Deferred revenues                         923           197
        Deferred income tax                        51             -
        Accrued expenses and
         other liabilities                        842           282
        --------------------                      ---           ---
              Total current
               liabilities                      2,371           528
        -------------------                     -----           ---
        Deferred income tax                       700             -
        Other liabilities                         239           111
      - -----------------                         ---           ---
                     Total
                      liabilities               3,310           639
      ---------------------------               -----           ---

      Shareholders'
       equity:
        Common stock                                -             -
        Additional paid-in
         capital                               12,170           490
        Net receivable from
         Vivendi and affiliated
         companies                                  -            77
        Retained earnings
         (accumulated deficit)                   (474)         (367)
        Accumulated other
         comprehensive income
         (loss)                                   (43)           40
        Treasury stock                           (126)            -
        --------------                           ----             -
              Total
               shareholders'
               equity                          11,527           240
        --------------------                   ------           ---
                  Total liabilities
                   and shareholders'
                   equity                     $14,837          $879
        ============================          =======          ====


    *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
    equivalent shares received by Vivendi, former parent of Vivendi Games, Inc.



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

                                            Cost of
                                  Cost      Sales -        Cost
    Quarter                        of       Software    of Sales -     Cost
     ended                       Sales -   Royalties   Intellectual     of
     December             Net    Product      and        property    Sales -
     31, 2008           Revenues  costs   Amortization    licenses     MMOG
    ---------           -------- -------- ------------ ------------- --------
     GAAP
      Measurement         $1,639    $805       $179           $174       $53
          Less:  Changes
           in deferred net
           revenues and
           related cost of
           sales (a)         705     135         61             19         -
           Less:  Equity-
            based
            compensation
            (including
            purchase price
            accounting
            related
            adjustments)
            (b)                -       -         (4)             -         -
          Less:  Results of
           Activision
           Blizzard's
           non-core
           exit operations
           (c)                (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)     -      (7)       (71)          (118)        -

                          ------    ----       ----            ---       ---
     Non-GAAP
      Measurement         $2,343    $933       $165            $75       $53
    -------------         ======    ====       ====            ===       ===



    Quarter                                     General              Total
     ended                              Sales     and                Costs
     December              Product       and    Adminis- Restruct-    and
     31, 2008            Development  Marketing trative    uring    Expenses
    ---------            -----------  --------- -------- ---------  --------
     GAAP
      Measurement            $196       $244      $104       $32    $1,787
          Less:  Changes
           in deferred net
           revenues and
           related cost of
           sales (a)            -          -         -         -       215
           Less:  Equity-
            based
            compensation
            (including
            purchase price
            accounting
            related
            adjustments) (b)  (10)        (4)      (25)        -       (43)
          Less:  Results of
           Activision
           Blizzard's
           non-core
           exit operations
           (c)                (10)        (3)       (3)        -       (16)
          Less:  One time
           costs related to
           the Vivendi
           transaction,
           integration and
           restructuring (d)    -          -       (11)      (32)      (43)
          Less:
           Amortization of
            intangibles and
            purchase price
            accounting
            related
            adjustments (e)     -         (4)       (1)        -      (201)

                             ----       ----       ---        --         -
     Non-GAAP
      Measurement            $176       $233       $64        $-    $1,699
    -------------            ====       ====       ===        ==    ======



    Quarter                                            Basic         Diluted
     ended                   Operating      Net       Earnings      Earnings
     December                 Income      Income       (Loss)        (Loss)
     31, 2008                  (Loss)      (Loss)     per Share     per Share
    ---------                ----------   -------     ---------     ---------
     GAAP
      Measurement               $(148)      $(72)       $(0.05)     $(0.05)
          Less:  Changes
           in deferred net
           revenues and
           related cost of
           sales (a)              490        313          0.24        0.23
           Less:  Equity-
            based
            compensation
            (including
            purchase price
            accounting
            related
            adjustments) (b)       43         26          0.02        0.02
          Less:  Results of
           Activision
           Blizzard's
           non-core
           exit operations
           (c)                     15         11          0.01        0.01
          Less:  One time
           costs related to
           the Vivendi
           transaction,
           integration and
           restructuring (d)       43         30          0.02        0.02
          Less:
           Amortization of
            intangibles and
            purchase price
            accounting
            related
            adjustments (e)       201        121          0.09        0.09

                                 ----       ----         -----       -----
     Non-GAAP
      Measurement                $644       $429         $0.32       $0.31
    -------------                ====       ====         =====       =====

     (a) Reflects the net change in deferred net revenues and related 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 exited or is winding down.
    (d) Reflects 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 and Year Ended December 31, 2008
    (Amounts in millions)



                                       Quarter Ended               Percent
                                       -------------
                            December 31, 2008      31-Dec-07      Increase
                           Amount % of Total  Amount % of Total  (Decrease)
                           ------ ----------  ------ ----------  ----------
    Geographic
     Revenue Mix
      North America          $903         55%   $198         44%        356%
      Europe                  660         40%    180         40%        267%
      Asia Pacific             75          5%     74         16%          1%
      ------------             --          -      --         --           -
      Total net revenues
       core operations      1,638        100%    452        100%        262%

      Non-core operations       1          0%      1          0%          0%
      -------------------       -          -       -          -           -
      Total consolidated
       net revenues        $1,639        100%   $453        100%        262%
      ------------------   ------        ---    ----        ---         ---


    Segment/
     Platform
     Mix
    Activision
     and
     Blizzard:
      MMOG                   $325         20%   $279         62%         16%
      Console                 958         59%    103         23%        830%
      Hand-held               135          8%     43         10%        214%
      PC                       49          3%     27          5%         81%
      ---                      --          -      --          -          --
      Total Activision
       and Blizzard net
       revenues             1,467         90%    452        100%        225%
      -----------------     -----         --     ---        ---         ---

      Total Distribution
       net revenues           171         10%      -          -         n/a
      ------------------      ---         --       -          -         ---
      Total net revenues
       core operations      1,638        100%    452        100%        262%

      Non-core operations       1          0%      1          0%          0%
      -------------------       -          -       -          -           -
      Total consolidated
       net revenues        $1,639        100%   $453        100%        262%
      ------------------   ------        ---    ----        ---         ---


                                         Year Ended                Percent
                                         ----------
                            December 31, 2008  December 31, 2007  Increase
                           Amount % of Total  Amount % of Total  (Decrease)
                           ------ ----------  ------ ----------  ----------
    Geographic
     Revenue Mix
      North America        $1,494         49%   $620         46%        141%
      Europe                1,287         42%    555         41%        132%
      Asia Pacific            228          8%    164         12%         39%
      ------------            ---          -     ---         --          --
      Total net revenues
       core operations      3,009         99%  1,339         99%        125%
      ------------------    -----         --   -----         --         ---

      Non-core operations      17          1%     10          1%         70%
      -------------------      --          -      --          -          --
      Total consolidated
       net revenues        $3,026        100% $1,349        100%        124%
      ------------------   ------        ---  ------        ---         ---


    Segment/
     Platform
     Mix
    Activision
     and
     Blizzard:
      MMOG                 $1,152         38% $1,024         76%         13%
      Console               1,294         43%    157         11%        724%
      Hand-held               237          8%     64          5%        270%
      PC                       99          3%     94          7%          5%
      ---                      --          -      --          -           -
      Total Activision
       and Blizzard net
       revenues             2,782         92%  1,339         99%        108%
      -----------------     -----         --   -----         --         ---

      Total Distribution
       net revenues           227          7%      -          -         n/a
      ------------------      ---          -       -          -         ---
      Total net revenues
       core operations      3,009         99%  1,339         99%        125%

      Non-core operations      17          1%     10          1%         70%
      -------------------      --          -      --          -          --
      Total consolidated
       net revenues        $3,026        100% $1,349        100%        124%
      ------------------   ------        ---  ------        ---         ---



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    FINANCIAL INFORMATION
    For the Quarter and Year Ended December 31, 2008




                         -------------  -------------  ----------  ----------
                         Quarter Ended  Quarter Ended  Year Ended  Year Ended
                           December       December      December    December
                              31,            31,          31,         31,
                             2008           2007         2008        2007

    Activision &
     Blizzard Net
     Revenues

      MMOG                        22%            62%         41%         77%
      ----                        --             --          --          --

      PC                           3%             6%          4%          7%
      ---                          -              -           -           -

      Console                     66%            23%         47%         12%
      -------                     --             --          --          --
        Sony
         PlayStation
          3                       11%             2%          9%          2%
        Sony
         PlayStation
          2                       14%             9%         10%          5%
        Microsoft
         Xbox 360                 19%             7%         13%          3%
        Nintendo
         Wii                      22%             5%         15%          2%

      Hand-held                    9%             9%          8%          4%
      ---------                    -              -           -           -
        Sony
         PlayStation
         Portable                  1%             3%          1%          2%
        Nintendo
         Dual Screen               8%             5%          7%          2%
        Nintendo
         Game Boy
         Advance                   0%             1%          0%          0%

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



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    For the twelve months ended December 31, 2008 and 2007
    GAAP to Non-GAAP Reconciliations
    Segment Information - Comparable Basis Segment Operating
     Income (Loss) (amounts in millions)
                                                                    Segments /
       Twelve months ended                       Distri-        Non-   Conso-
        December 31,       Activision  Blizzard  bution  Core  Core   lidated
        2008                   (i)       (ii)     (iii)   (iv)  (v)    Total
                           ----------- --------- ------- ----- ----- --------

         Segment
          operating
          income
          (loss) (VG
          Jan. 1-Dec.
          31,
          Activision
          July 10-Dec.
          31)                  $307       $704     $22 $1,033  $(266)    $767

       Reconciliation
        to GAAP
        consolidated
        operating
        income (loss)
                 - Net
                  effect
                  from
                  deferral
                  of net
                  revenues
                  and cost
                  of sales                                               (496)
             - Stock-based
              compensation                                                (90)
             - Restructuring
              expenses                                                    (93)
                 - Amortization
                  of intangible
                  assets and
                  purchase
                  price
                  accounting
                  related
                  adjustments                                            (292)
              - Integration
               and
               transaction
               costs                                                      (29)

                                                                        -----
       Consolidated
        operating
        income (loss)
        (GAAP)                                                          $(233)

      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)               $469       $704     $27 $1,200
    ----------------           ----       ----     --- ------
                                                                    Segments /
       Twelve months ended                       Distri-        Non-  Conso-
        December 31,       Activision  Blizzard  bution   Core  Core  lidated
        2007                   (i)       (ii)    (iii)    (iv)   (v)   Total
                           ----------- --------- ------- ----- ----- --------

        Segment
         operating
         income
         (loss) (VG
         only)                 $(13)      $568      $-   $555  $(198)    $357

       Reconciliation
        to GAAP
        consolidated
        operating
        income (loss)
                 - Net
                  effect
                  from
                  deferral
                  of net
                  revenues
                  and cost
                  of sales                                                (38)
             - Stock-based
              compensation                                               (137)
             - Restructuring
              expenses                                                      1
                 - Amortization
                  of intangible
                  assets and
                  purchase
                  price
                  accounting
                  related
                  adjustments                                              (4)

                                                                         ----
       Consolidated
        operating
        income (loss)
        (GAAP)                                                           $179

      Comparable
       Presentation
       Adjustment:
         Including
          Activision,
          Inc. prior
          periods for
          the twelve
          months ended
         December 31,
         2007
     Segment operating
      income (loss)             424          -      15    439             439
       Reconciliation to
        consolidated
        operating income
        (loss)
             - Stock-based
              compensation                                                (43)
                                                                          ---
           Consolidated
            operating
            income (loss)                                                $396

     ---------------           ----       ----     ---   ----
         Non-GAAP
          Comparable
          Basis
          Segment
          Operating
          Income
          (Loss)               $411       $568     $15   $994
    ----------------           ----       ----     ---   ----
         - Change in
          comparable
          basis --
          twelve months
          ended
          December 31,
          2008 vs. 2007                                    21%
    -------------------                                    --

    (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 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
    exited or is winding down as part of our restructuring and integration
    efforts as a result of the business combination.
    To conform to current period measurement of segment operating income,
    inter-segment adjustments were not included as a measurement of the
    segment profit or loss for the quarter and year ended December 31, 2007.
    This is consistent with our measurement of segment profit or loss for the
    quarter and year ended December 31, 2008.  It was determined that
    excluding these inter-segment adjustments would result in the most
    comparable presentation of segment performance. Therefore, for the
    quarter and year ended December 31, 2008, and 2007, we have excluded
    these inter-segment adjustments. For our previously issued September 30,
    2008 results, the nine and three months ended September 30, 2007
    measurement of segment operating income included inter-segment
    adjustments of $41 million and $11 million in Activision, $5 million and
    $1 million in Blizzard, and ($46) million and ($12) million in Non-Core,
    respectively. Excluding these inter-segment adjustments for the nine and
    three months ended September 30, 2007, Activision segment operating
    income would have reported as ($38) million and ($8) million, Blizzard
    segment operating income would have reported as $452 million and $133
    million, and Non-Core segment operating income would have reported as
    ($132) million and ($52) million, respectively.
    There is no effect to the reported segment and consolidated operating
    income for the nine and three months ended September 30, 2008, and there
    is no impact to the consolidated operating income for the nine and three
    months ended September 30, 2007.



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    For the Three Months Ended December 31, 2008 and 2007
    GAAP to Non-GAAP Reconciliations
    Segment Information - Comparable Basis Segment Operating Income (Loss)
     (amounts in millions)
                                                                    Segments /
       Three months ended                       Distri-        Non-   Conso-
        December 31,       Activision  Blizzard  bution  Core  Core   lidated
        2008                   (i)       (ii)    (iii)   (iv)   (v)    Total
                           ----------- --------- ------- ----- ----- --------

     Segment operating
      income (loss)            $368      $257     $19  $644   $(15)   $629

       Reconciliation
        to GAAP
        consolidated
        operating
        income (loss)
                 - Net
                  effect
                  from
                  deferral
                  of net
                  revenues
                  and cost
                  of sales                                            (490)
             - Stock-based
              compensation                                             (43)
             - Restructuring
              expenses                                                 (32)
                 - Amortization
                  of intangible
                  assets and
                  purchase
                  price
                  accounting
                  related
                  adjustments                                         (201)
              - Integration
               and
               transaction
               costs                                                   (11)

                                                                     -----
       Consolidated
        operating
        income (loss)
        (GAAP)                                                       $(148)


     ---------------           ----      ----     ---  ----
         Non-GAAP
          Comparable
          Basis
          Segment
          Operating
          Income
          (Loss)               $368      $257     $19  $644
    ----------------           ----      ----     ---  ----

                                                                    Segments /
       Three months ended                        Distri-        Non-  Conso-
        December 31,       Activision  Blizzard  bution  Core  Core   lidated
        2007                   (i)       (ii)     (iii)  (iv)   (v)    Total
                           ----------- --------- ------- ----- ----- --------

        Segment
         operating
         income
         (loss) (VG
         only)                  $24      $116      $-  $140   $(63)     $77

       Reconciliation
        to GAAP
        consolidated
        operating
        income (loss)
                 - Net
                  effect
                  from
                  deferral
                  of net
                  revenues
                  and cost
                  of sales                                               30
             - Stock-based
              compensation                                              (61)
                 - Amortization
                  of intangible
                  assets and
                  purchase
                  price
                  accounting
                  related
                  adjustments                                            (1)

                                                                        ---
       Consolidated
        operating
        income (loss)
        (GAAP)                                                          $45

      Comparable
       Presentation
       Adjustment:
         Including
          Activision,
          Inc. prior
          periods for
          the three
          months ended
         December 31,
         2007
     Segment operating
      income (loss)             412         -      14   426             426
       Reconciliation to
        consolidated
        operating income
        (loss)
             - Stock-based
              compensation                                              (21)
                                                                        ---
           Consolidated
            operating
            income (loss)                                              $405

     ---------------           ----      ----     ---  ----
         Non-GAAP
          Comparable
          Basis
          Segment
          Operating
          Income
          (Loss)               $436      $116     $14  $566
    ----------------           ----      ----     ---  ----
         - Change in
          comparable
          basis --three
          months ended
          December 31,
          2008 vs. 2007                                  14%
    -------------------                                  --

    (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 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
    exited or is winding down as part of our restructuring and integration
    efforts as a result of the business combination.
    To conform to current period measurement of segment operating income,
    inter-segment adjustments were not included as a measurement of the
    segment profit or loss for the quarter and year ended December 31, 2007.
    This is consistent with our measurement of segment profit or loss for
    the quarter and year ended December 31, 2008.  It was determined that
    excluding these inter-segment adjustments would result in the most
    comparable presentation of segment performance. Therefore, for the
    quarter and year ended December 31, 2008, and 2007, we have excluded
    these inter-segment adjustments. For our previously issued September 30,
    2008 results, the nine and three months ended September 30, 2007
    measurement of segment operating income included inter-segment
    adjustments of $41 million and $11 million in Activision, $5 million and
    $1 million in Blizzard, and ($46) million and ($12) million in Non-Core,
    respectively. Excluding these inter-segment adjustments for the nine and
    three months ended September 30, 2007, Activision segment operating
    income would have reported as ($38) million and ($8) million, Blizzard
    segment operating income would have reported as $452 million and $133
    million, and Non-Core segment operating income would have reported as
    ($132) million and ($52) million, respectively.
    There is no effect to the reported segment and consolidated operating
    income for the nine and three months ended September 30, 2008, and there
    is no impact to the consolidated operating income for the nine and three
    months ended September 30, 2007.



    ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
    For the Twelve Months Ended December 31, 2008 and 2007
    GAAP to Non-GAAP Reconciliations
    Segment Information - Comparable Basis Segment Net Revenues
     (amounts in millions)

                                                                   Segments /
       Twelve months ended                     Distri-          Non-  Conso-
        December 31,     Activision  Blizzard  bution   Core   Core  lidated
        2008                (i)        (ii)     (iii)    (iv)   (v)   Total
                         ----------- --------- -------  -----  ----- --------

         Segment net
          revenues (VG
          Jan. 1-Dec.
          31, Activision
          July 10-Dec.
          31)              $2,152    $1,343    $227 $3,722    $17     $3,739

       Reconciliation to
        GAAP consolidated
        net revenues
          - Net effect
           from
           deferral of
           net revenues                                                 (713)

                                                                      ------
     Consolidated net
      revenues (GAAP)                                                 $3,026

      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      $3,279    $1,343    $410 $5,032
    ------------------     ------    ------    ---- ------
                                                                    Segments /
       Twelve months ended                    Distri-          Non-    Conso-
        December 31,     Activision  Blizzard  bution   Core   Core   lidated
        2007                 (i)       (ii)     (iii)    (iv)   (v)    Total
                         ----------- --------- -------  -----  -----  --------

      Segment net
       revenues (VG
       only)                 $272    $1,107      $- $1,379    $10     $1,389

       Reconciliation to
        GAAP consolidated
        net revenues
          - Net effect
           from
           deferral of
           net revenues                                                  (40)

                                                                      ------
     Consolidated net
      revenues (GAAP)                                                 $1,349

      Comparable
       Presentation
       Adjustment:
         Including
          Activision,
          Inc. prior
          periods for
          the twelve
          months ended
          December 31,
          2007
               Segment net
                revenues    2,200         -     408  2,608

     ------------------    ------    ------    ---- ------
        Non-GAAP
         Comparable
         Basis Segment
         Net Revenues      $2,472    $1,107    $408 $3,987
    ------------------     ------    ------    ---- ------
         - Change in
          comparable
          basis --
          twelve months
          ended
          December 31,
          2008 vs. 2007                                 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 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
    exited or is winding 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 December 31, 2008 and 2007
    GAAP to Non-GAAP Reconciliations
    Segment Information - Comparable Basis Net Revenues (amounts in millions)

                                                                    Segments /
       Three months ended                     Distri-          Non-    Conso-
        December 31,    Activision  Blizzard  bution   Core   Core    lidated
        2008               (i)        (ii)     (iii)    (iv)   (v)      Total
                        ----------- --------- -------  -----  -----  --------

     Segment net
      revenues              $1,695      $477    $171 $2,343     $1     $2,344

       Reconciliation to
        GAAP consolidated
        net revenues
           - Net
            effect
            from
            deferral
            of net
            revenues                                                     (705)

                                                                       ------
     Consolidated net
      revenues (GAAP)                                                  $1,639

     ------------------     ------      ----    ---- ------
        Non-GAAP
         Comparable
         Basis Segment
         Net Revenues       $1,695      $477    $171 $2,343
    ------------------      ------      ----    ---- ------

                                                                   Segments /
       Three months ended                     Distri-         Non-   Conso-
        December 31,    Activision  Blizzard  bution   Core   Core    lidated
        2007                (i)       (ii)     (iii)    (iv)   (v)    Total
                        ----------- --------- -------  -----  -----  --------

      Segment net
       revenues (VG
       only)                  $164      $251      $-   $415     $1       $416

       Reconciliation to
        GAAP consolidated
        net revenues
           - Net
            effect
            from
            deferral
            of net
            revenues                                                       37

                                                                         ----
     Consolidated net
      revenues (GAAP)                                                    $453

      Comparable
       Presentation
       Adjustment:
         Including
          Activision,
          Inc. prior
          periods for
          the three
          months ended
             December
             31, 2007
               Segment net
                revenues     1,308         -     174  1,482

     ------------------     ------      ----    ---- ------
        Non-GAAP
         Comparable
         Basis Segment
         Net Revenues       $1,472      $251    $174 $1,897
    ------------------      ------      ----    ---- ------
         - Change in
          comparable
          basis --three
          months ended
          December 31,
          2008 vs. 2007                                  24%
    -------------------                                  --


    (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 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
    exited or is winding down as part of our restructuring and integration
    efforts as a result of the business combination.


      Activision Blizzard Outlook
      For the Quarter Ending March 31, 2009 and Year Ending
      December 31, 2009
      GAAP to Non-GAAP Reconciliation
      (In millions, except earnings
       (loss) per share data)              Outlook for      Outlook for
                                         Quarter Ending     Year Ending
                                         March 31, 2009  December 31, 2009
                                         --------------  -----------------

      Net Revenues (GAAP)                          $860             $4,200

      Excluding the impacts of:
      -------------------------
      Change in deferred net revenues              (310)               500 (a)
                                                   ----                ---

      Non-GAAP Net Revenues                        $550             $4,700


      Earnings Per Diluted Share (GAAP)           $0.08              $0.22

      Excluding the impacts of:
      -------------------------
      Change in deferred net revenues
       and related cost of sales                  (0.10)              0.15 (b)
      Equity based compensation
       (including purchase price
       accounting related adjustments)             0.02               0.08 (c)
      Results of products and
       operations that the company
       has exited or is winding down               0.00               0.01 (d)
      One time costs related to
       the Vivendi transaction,
       integration and
       restructuring                               0.01               0.02 (e)
      Amortization of intangibles
       and purchase price accounting
       related adjustments                         0.02               0.13 (f)

                                                  -----              -----
      Non-GAAP Earnings Per
       Diluted Share                              $0.03              $0.61


    (a) Reflects the net change in deferred net revenues.
    (b) Reflects the net change in deferred net revenues and related cost of
    sales.
    (c) Reflects equity based compensation costs, including the increase in
    fair value associated with the historical Activision 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.
    (d) Reflects the results of products and operations from the historical
    Vivendi Games businesses that the company has exited or is winding down
    and exit costs from the cancellation of projects.
    (e) Reflects one-time costs related to the business combination with
    Vivendi Games (including transaction costs, integration costs and
    restructuring activities).  Restructuring activities includes severance
    costs and facility exit costs.
    (f) Reflects amortization of intangible assets, 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, Inc.

http://www.activision.com

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