Print page |
Email page
| 
Download PDF
|
Add to briefcase
| 
Share
Delicious
Digg
Facebook
LinkedIn
Twitter
« Previous Release | Next Release »
Activision Reports Fiscal 2006 Year End Results
- Company Delivers Record Net Revenues -
- Performance Marks 14 Consecutive Years of Revenue Growth -
- Company Ended Fiscal 2006 as #2 U.S. Video Game Publisher Overall -
SANTA MONICA, Calif., May 4, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Activision, Inc. (Nasdaq: ATVI) today announced record net revenues for the fiscal year ended March 31, 2006.
Net revenues for the fiscal year ended March 31, 2006 were $1,468 million, as compared to $1,406 million for the fiscal year ended March 31, 2005. Net income for the fiscal year was $41.9 million, or $0.14 per diluted share, as compared to net income of $138.3 million, or $0.50 per diluted share reported for the last fiscal year.
Net revenues for the fourth quarter ended March 31, 2006 were $188.1 million, as compared to $203.9 million that the company reported for the fourth quarter of the last fiscal year. For the fourth quarter, the company reported a net loss of $9.2 million, or a loss per share of $0.03, as compared to net income of $3.6 million, or earnings per diluted share of $0.01 for the fiscal year 2005 fourth quarter.
Robert Kotick, Chairman and CEO of Activision, Inc. commented, "Activision's fiscal year 2006 net revenues totaled $1,468 million, marking 14 consecutive years of revenue growth. We delivered better than expected results for the fourth quarter. Our balance sheet remains one of the strongest in the industry with nearly $1 billion in cash and short-term investments and $1.2 billion in shareholder's equity. In fiscal 2006, we strengthened our market position, although our operating results were impacted by the challenges of a console transition. We ended the fiscal year as the #2 U.S. software publisher overall and had the #1 game on the next-generation Xbox 360 platform, Call of Duty 2(TM), according to the NPD Group."
Kotick added, "Looking ahead, we will continue to leverage our assets -- the competitive leadership of our world-class franchises, production capabilities and worldwide distribution resources. Our leadership position will provide us with a competitive advantage in our continued efforts to provide superior returns to our shareholders. We are planning for and investing in the market growth that historically follows the introduction of new console hardware. We remain focused on expanding operating margins by growing our balanced franchise portfolio, delivering compelling game experiences, increasing our international market position and improving operational efficiency worldwide."
Business Highlights
Yesterday, Activision announced that it has been awarded the rights to develop and publish interactive entertainment games based on the James Bond license through 2014. Under the terms of the agreement, Activision has obtained the worldwide rights to develop games for all current and next-generation consoles, the PC and hand-held platforms for the James Bond license. The license grants Activision the right to develop and publish games based on subsequent movies, as well as non-movie games.
Since the initial release of Dr. No in 1962, James Bond films have grossed more than $3.6 billion theatrically worldwide, and approximately 30 million units of video games based on the world of James Bond have been sold to date. Bond is one of the most successful franchises in film history and continues to have popular global appeal.
During the fiscal year, Activision's game slate was based on such franchises as Call of Duty(TM), DOOM(R), QUAKE(R), Shrek(TM)(R), Spider-Man(R), True Crime(TM), Tony Hawk(TM), World Series of Poker(R) and X-Men(R).
* Sales of the Tony Hawk games exceeded $1 billion and the franchise was
a top-10 selling game for the sixth consecutive year.
* The company successfully launched an internally developed game GUN(TM)
which marks the third consecutive year that Activision has created the
#1 new intellectual property in the marketplace.
* Additionally, the company's multi-title approach with Call of Duty 2
and Call of Duty 2: Big Red One(TM) drove the brand to be its
best-selling franchise of fiscal 2006.
* Call of Duty 2 ended the year as #1 best-selling Xbox 360 game.
Other business highlights are as follows:
During the fiscal year, Activision signed four exclusive long-term licensing agreements and acquired two development studios. These initiatives will allow the company to plan its game slate three to five years in advance and make prudent investments that may facilitate future growth.
* Activision expanded its alliance with Marvel Enterprises for the
Spider-Man(TM) and X-Men(TM) franchises and its agreement with
Spider-Man Merchandising L.P. and Sony Pictures Consumer Products Inc.,
to extend its worldwide publishing rights to the phenomenally
successful Spider-Man(R) motion pictures through 2017. To date, games
based on the Spider-Man and X-Men franchises have generated more than
$785 million in video game sales worldwide.
* Activision signed a multi-year agreement with DreamWorks Animation for
the exclusive video game rights to four upcoming feature films -- "Bee
Movie," "Kung Fu Panda," "Rex Havoc" and "How to Train Your Dragon."
The deal also extended its rights beyond "Shrek 3" to include potential
future films in the "Shrek" franchise. The company's alliance with
DreamWorks has resulted in more than $300 million in video game sales
worldwide.
* Activision entered into an agreement with The Hasbro Properties Group
to develop console, handheld and PC games based on Hasbro's renowned
Transformers brand. Transformers has been one of the best-selling
boys' action brands in a wide-range of categories, from toys to
publishing to apparel, since its launch as a global property in 1984.
* Activision strengthened its internal development capabilities with two
game developer acquisitions -- Toys For Bob, Inc. and Beenox, Inc.
Toys For Bob created Madagascar(TM), which was based on DreamWorks
Animation's feature film and ended calendar 2005 as the #1 best-selling
children's movie game in the U.S. Beenox provided us with a foothold
in the Canadian province of Quebec, one of the fastest growing
development talent pools in North America.
In fiscal 2006, Activision's European publishing net revenues grew 18% to more than $400 million. The company sells direct to retail in the seven largest European markets -- UK, France, Germany, Benelux, Nordic, Spain and Italy and during the fiscal year added Austria. Through its direct model, Activision is increasing volume, market share, retail presence, customer relationships and logistic and financial efficiencies.
For the first quarter of fiscal 2007, Activision will release games based on two highly anticipated summer movie releases, DreamWorks Animation's "Over the Hedge" and Twentieth Century Fox and Marvel Studio's "X-Men: The Last Stand."
Company Outlook
For fiscal 2007, Activision expects net revenues of $1.025 billion and earnings per diluted share of $0.10, including the impact of adopting FAS 123(R), which relates to the expensing of stock options and other share-based payments. Excluding the impact of FAS 123(R), the company expects earnings per diluted share of $0.15. This is consistent with the company's previously provided outlook.
For the first quarter of the fiscal year 2007, the company expects net revenues of $145 million and a loss per share of $0.11, including the impact of adopting FAS 123(R). The company's loss per share outlook for the first quarter excluding the impact of FAS 123(R) is expected to be $0.10.
Activision also reaffirmed its fiscal year 2008 outlook. The company expects net revenues to exceed $1.6 billion.
Conference Call
Today at 4:30 p.m. EDT, Activision's management will host a conference call and Webcast to discuss its fiscal 2006 year-end results and outlook for fiscal 2007. The company welcomes all members of the financial and media communities to visit the "Investor Relations" area of www.activision.com to listen to the conference call via a live Webcast or to listen to the call live by dialing into in the U.S. (719) 457-2637 in the U.S.
About Activision
Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1,468 million for the fiscal year ended March 31, 2006.
Activision maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Italy, Spain, Japan, Australia, Scandinavia and the Netherlands. More information about Activision and its products can be found on the company's World Wide Web site, which is located at www.activision.com.
Note: The statements made in this press release that are not historical facts are "forward-looking" statements. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties. The company cautions readers of this press release that a number of important factors could cause Activision's actual future results to differ materially from those expressed in any such forward-looking statements. Such factors include, without limitation, sales of the company's titles during the remainder of fiscal 2007, consumer spending trends, the seasonal and cyclical nature of the interactive game market, the company's ability to predict consumer preferences among competing hardware platforms including next-generation hardware, software pricing, product returns and price protection product delays, retail acceptance of our products, delays in hardware launches, industry competition, rapid changes in technology and industry standards, protection of proprietary rights, maintenance of relationships with key personnel, vendors and third-party developers, international economic and political conditions, integration of recently acquired subsidiaries and identification of suitable future acquisition opportunities. These important factors and other factors that potentially could affect the company's financial results are described in our filings with the Securities and Exchange Commission, including the company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers of this press release are referred to such filings. The company may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in the company's assumptions or otherwise. The company undertakes no obligation to release publicly any revisions to its forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Quarter ended March 31, Year ended March 31,
2006 2005 2006 2005
Net revenues $188,125 $203,861 $1,468,000 $1,405,857
Costs and expenses:
Cost of sales - product
costs 117,853 130,190 734,874 658,949
Cost of sales - software
royalties and amortization 8,555 6,954 147,822 123,800
Cost of sales -
intellectual property
licenses 1,901 4,400 57,666 62,197
Product development 32,769 20,489 131,782 86,543
Sales and marketing 24,263 29,842 283,220 230,058
General and administrative 28,899 14,885 94,679 59,739
Total operating
expenses 214,240 206,760 1,450,043 1,221,286
Operating income (loss) (26,115) (2,899) 17,957 184,571
Investment income, net 7,790 5,138 30,630 13,092
Income (loss) before income
tax provision (18,325) 2,239 48,587 197,663
Income tax provision (benefit) (9,106) (1,334) 6,688 59,328
Net income (loss) $(9,219) $3,573 $41,899 $138,335
Basic earnings (loss) per share $(0.03) $0.01 $0.15 $0.55
Weighted average common shares
outstanding 276,506 260,551 273,177 250,023
Diluted earnings (loss) per
share $(0.03) $0.01 $0.14 $0.50
Weighted average common shares
outstanding assuming dilution 276,506 287,485 299,437 278,860
Share and earnings per share data have been restated to reflect our four-for-three stock split for shareholders of record as of October 10, 2005, paid October 24, 2005.
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, March 31,
2006 2005
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $944,960 $840,864
Accounts receivable, net 28,782 109,144
Inventories 61,483 48,018
Software development 40,260 73,096
Intellectual property licenses 4,973 21,572
Deferred income taxes 30,017 6,760
Other current assets 25,933 23,010
Total current assets 1,136,408 1,122,464
Software development 20,359 18,518
Intellectual property licenses 82,073 14,154
Property and equipment, net 45,368 30,490
Deferred income taxes 33,460 28,041
Other assets 1,409 1,635
Goodwill 100,446 91,661
Total assets $1,419,523 $1,306,963
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $88,994 $108,984
Accrued expenses 103,169 98,067
Total current liabilities 192,163 207,051
Other liabilities 1,776 --
Total liabilities 193,939 207,051
Shareholders' equity:
Common stock -- --
Additional paid-in capital 823,735 741,680
Retained earnings 388,513 346,614
Accumulated other comprehensive
income 16,369 11,618
Unearned compensation (3,033) --
Total shareholders' equity 1,225,584 1,099,912
Total liabilities and
shareholders' equity $1,419,523 $1,306,963
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Year Ended March 31, 2006 and 2005
(Amounts in thousands)
Percent
Increase
Quarter Ended (Decrease)
March 31, 2006 March 31, 2005
% of % of
Amount Total Amount Total
Geographic Revenue Mix
North America $83,502 44% $69,087 34% 21%
International 104,623 56% 134,774 66% -22%
Total net revenues $188,125 100% $203,861 100% -8%
Segment/Platform Mix
Publishing:
Console $82,272 44% $66,878 33% 23%
Hand-held 15,211 8% 33,353 16% -54%
PC 28,722 15% 30,398 15% -6%
Total publishing net
revenues $126,205 67% $130,629 64% -3%
Distribution:
Console $33,069 18% $52,826 26% -37%
Hand-held 16,744 9% 8,148 4% 105%
PC 12,107 6% 12,258 6% -1%
Total distribution net
revenues $61,920 33% $73,232 36% -15%
Total net revenues $188,125 100% $203,861 100% -8%
Percent
Increase
Quarter Ended (Decrease)
March 31, 2006 March 31, 2005
% of % of
Amount Total Amount Total
Geographic Revenue Mix
North America $710,040 48% $696,325 50% 2%
International 757,960 52% 709,532 50% 7%
Total net revenues $1,468,000 100% $1,405,857 100% 4%
Segment/Platform Mix
Publishing:
Console $812,345 55% $713,947 51% 14%
Hand-held 158,861 11% 138,695 10% 15%
PC 183,457 13% 220,087 15% -17%
Total publishing net
revenues $1,154,663 79% $1,072,729 76% 8%
Distribution:
Console $196,413 13% $256,452 18% -23%
Hand-held 76,973 5% 23,282 2% 231%
PC 39,951 3% 53,394 4% -25%
Total distribution
net revenues $313,337 21% $333,128 24% -6%
Total net revenues $1,468,000 100% $1,405,857 100% 4%
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Year Ended March 31, 2006 and 2005
Quarter Quarter Year Year
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
Publishing Net Revenues
PC 23% 23% 16% 21%
Console 65% 51% 70% 66%
Sony PlayStation 2 27% 26% 36% 39%
Microsoft Xbox 360 25% 0% 9% 0%
Microsoft Xbox 8% 22% 18% 18%
Nintendo GameCube 5% 3% 7% 9%
Hand-held 12% 26% 14% 13%
Nintendo Game Boy Advance 6% 7% 7% 9%
Sony PlayStation Portable 4% 15% 5% 2%
Nintendo Dual Screen 2% 4% 2% 2%
Total publishing net revenues 100% 100% 100% 100%
SOURCE Activision, Inc.
Kristin Mulvihill Southey, Vice President, Investor Relations, +1-310-255-2635, ksouthey@activision.com, or Maryanne Lataif, Vice President, Corporate Communications, +1-310-255-2704, mlataif@activision.com, both of Activision, Inc.
http://www.prnewswire.com
Copyright (C) 2006 PR Newswire. All rights reserved.
News Provided by COMTEX