SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 8, 2003 (May 8, 2003)
ACTIVISION, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-12699 95-4803544
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3100 Ocean Park Blvd., Santa Monica, CA 90405
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (310) 255-2000
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release of Activision, Inc., dated May 8, 2003.
Item 9. Regulation FD Disclosure.
On May 8, 2003, Activision, Inc. issued a press release announcing its
fourth quarter and FY 2003 year-end results. The press release is attached
hereto as Exhibit 99.1.
This information is also being furnished pursuant to Item 12 -- Results of
Operations and Financial Condition, of Form 8-K and is being presented under
Item 9 of Form 8-K in accordance with interim guidance issued by the Securities
and Exchange Commission in Release Nos. 33-8216 and 34-47583. This information
is not deemed to be "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934 and is not incorporated by reference into any Securities
Act registration statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 8, 2003
ACTIVISION, INC.
By: /s/ Ronald Doornink
-------------------------
Name: Ronald Doornink
Title: President
Exhbiti 99.1
Contacts: Bill Chardavoyne
Chief Financial Officer
(310) 255-2229
bchardavoyne@activision.com
Kristin Mulvihill Southey
Vice President, Investor Relations
(310) 255-2635
ksouthey@activision.com
Maryanne Lataif
Vice President, Corporate Communications
(310) 255-2704
mlataif@activision.com
FOR IMMEDIATE RELEASE
ACTIVISION REPORTS RECORD FISCAL 2003 YEAR END RESULTS
- Net Revenue and Earnings Per Share Highest In Company's History-
- Net Income Increases 27% Year Over Year-
SANTA MONICA, CA - May 8, 2003 - Activision, Inc. (Nasdaq: ATVI) today
announced financial results for the fourth quarter and fiscal year ended March
31, 2003.
Net revenues for the fiscal year ended March 31, 2003 were $864.1 million
or 10% higher, as compared to $786.4 million for the fiscal year ended March 31,
2002. Net income for the fiscal year was $66.2 million, or a record $0.96 per
diluted share, compared with net income of $52.2 million, or $0.88 per diluted
share reported for the last fiscal year.
Net revenues for the fourth quarter ended March 31, 2003 were $125.0
million as compared to $164.9 million that the company reported for the fourth
quarter of the last fiscal year. For this fiscal year's fourth quarter, the
company reported a net loss of $8.0 million or a loss per share of $0.13, as
compared to net income of $10.9 million or $0.17 per diluted share, for last
fiscal year's fourth quarter.
Activision increased its outlook for the first quarter of fiscal 2004 to
$140 million in revenues and a loss per share of $0.01. The company also
provided an outlook for the second quarter of $130 million in revenue and
earnings per diluted share of $0.05. The company's full year outlook remains
unchanged at $750 million in revenue and $0.70 earnings per diluted share.
(more)
Robert Kotick, Chairman and CEO of Activision, Inc. commented, "Fiscal 2003
was another record year for Activision. Not only did we deliver the highest net
revenues and earnings in the company's history, we also significantly
strengthened our business, balance sheet and overall financial position. We grew
net income by 27%, and finished the year with more than $400 million of cash and
short-term investments, lower inventories and all time low DSOs. We have one of
the strongest balance sheets in the industry which gives us a clear competitive
advantage as we enter the new fiscal year."
"We will enter fiscal 2004 with the largest installed base of video gaming
platforms in the industry's history. We have a balanced portfolio of both
licensed and original properties including id Software's Doom? III and Return to
Castle Wolfenstein?, a new game based on Tony Hawk, Soldier of Fortune 2: Double
Helix? and Tenchu: Wrath of Heaven?, X2 Wolverine's Revenge?, Disney's Extreme
Skate Adventure?, as well as True Crime: Streets of L.A.?, Call of Duty? and
Pitfall Harry?. As the installed base for the new console systems continues to
grow, we believe that our diversified product slate, strong brand franchises and
top developer partnerships will position us well for both near- and long-term
opportunities."
Business Highlights
Activision's fiscal year end results were driven by solid performance of
its titles across all platforms. The company continued its market leadership
position in both the action sports and super heroes genres with Spider-Man? and
Tony Hawk's Pro Skater? both ending the calendar year as top five franchises in
North America for the console and hand-held platforms. Additionally, Soldier of
Fortune 2: Double Helix, Street Hoops?, Medieval Total War? and Tenchu: Wrath of
Heaven performed well worldwide.
During the fourth quarter, the company's Tenchu: Wrath of Heaven was the #1
PlayStation 2 game in the U.S. for the month of March and topped sell-through
retail charts in the U.K., Germany and several regions in the Asia Pacific
territory.
Other highlights from the fiscal year are as follows:
o Activision significantly strengthened its intellectual property
portfolio through five multi-year partnership agreements:
o The company entered into a strategic multi-year, multi-property
publishing agreement that grants Activision the exclusive
interactive rights to publish games based on DreamWorks' three
upcoming computer-animated feature films: "Sharkslayer,"
"Madagascar," and "Over the Hedge."
(more)
o The company was named master videogame licensee for Lemony
Snicket's A Series of Unfortunate Events, the best-selling
children's book series that is in development for a feature film
by Paramount Pictures and Nickelodeon Movies.
o The company entered into an exclusive agreement with legendary
U.K.-based game designer Peter Molyneux. Under the terms of the
agreement, the company has secured the exclusive worldwide rights
to Molyneux's new project tentatively titled The Movies for the
PC and all video game console platforms.
o The company entered into an exclusive agreement with Valve L.L.C.
that grants Activision exclusive worldwide publishing rights to
upcoming games created by the premiere PC game developer.
o The company expanded its long-term, broad-based strategic
alliance with Marvel Enterprises and signed by signing a
multi-year extension for their current video game licensing
agreements. The expanded agreements with Marvel grant Activision
the exclusive rights to develop and publish video game products
based on Marvel's comic book franchises Spider-Man?, X-MEN?,
Fantastic Four? and Iron Man? through 2009.
o Activision acquired two development studios - Luxoflux and Z-Axis -
each of which has developed a title that has shipped more than one
million units. Additionally, the company purchased an equity interest
in Infinity Ward, a newly formed studio comprised of 22 of the members
who developed the hit title Medal of Honor for the PC.
Under Activision's authorized share buyback program, during the fiscal year
2003, the company purchased 7.2 million shares of common stock at an average
cost of $14.08 per share. During the fourth quarter ended March 31, 2003, the
company purchased 5.4 million shares at an average cost of $14.40 per share.
Additionally, under the authorized share buyback program the company entered
into a series of structured stock repurchase transactions, in the aggregate
amount of approximately $110 million, of which $85 million was entered into
during the fourth quarter.
On May 5, 2003, the company announced that its Board of Directors has
approved a three-for-two split of its outstanding common shares. The split is
payable on June 6, 2003, to shareholders of record as of May 16, 2003. The stock
split will be accomplished through a 50% stock dividend, providing shareholders
with one additional share of common stock for every two shares they hold.
(more)
Looking ahead to the first quarter of fiscal year 2004, our slate is being
driven by X2 Wolverine's Revenge, which shipped simultaneously on five platforms
in advance of Twentieth Century Fox's movie release, id Software's Return to
Castle Wolfenstein and Wakeboarding Unleashed? featuring Shaun Murray for the
Xbox and PlayStation 2 computer entertainment system, Soldier of Fortune II:
Double Helix? for the Xbox, Lost Kingdoms? a real-time action RPG for the
Nintendo GameCube and Day of Defeat?, Medieval Total War: Viking Invasion? and
Star Trek?: Elite Force 2? for the PC .
Today at 4:30 p.m. EDT, Activision's management will host a conference call
and Webcast to discuss its fiscal 2003 year-end results and outlook. The company
welcomes all members of the financial and media communities to visit the
"Investor Relations" area of www.activision.com to listen to the conference call
via live Webcast or to listen to the call live by dialing into (952) 556-2802.
Headquartered in Santa Monica, California, Activision, Inc. is a leading
worldwide developer, publisher and distributor of interactive entertainment and
leisure products. Founded in 1979, Activision posted net revenues of $864
million for the fiscal year ended March 31, 2003.
Activision maintains operations in the U.S., Canada, the United Kingdom,
France, Germany, Japan, Australia, Scandinavia and the Netherlands. More
information about Activision and its products can be found on the company's
World Wide Web site, which is located at http://www.activision.com.
Note: The statements made in this press release that are not historical facts
are forward looking statements. Although the company believes that its plans,
intentions and expectations reflected in such forward-looking statements are
reasonable, a number of important factors could cause our actual future results
to differ materially from those expressed in any such forward-looking
statements.
Such factors include, without limitation, product delays, retail acceptance of
our products, industry competition, rapid changes in technology and industry
standards, protection of proprietary rights, maintenance of relationships with
key personnel, vendors and third party developers, international economic and
political conditions, integration of recently acquired subsidiaries and
identification of suitable future acquisition opportunities.
These important factors and other factors that potentially could affect the
company's financial results are described in our filings with the Securities and
Exchange Commission, including the company's most recent Annual Report on Form
10 K and Quarterly Reports on Form 10-Q.
(Tables to Follow)
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Quarter ended March 31, Year ended March 31,
2003 2002 2003 2002
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Net revenues $ 125,001 $ 164,912 $ 864,116 $ 786,434
Costs and expenses:
Cost of sales
- product costs 71,973 87,886 440,977 435,725
Cost of sales
- software royalties
and amortization 12,647 11,192 79,194 58,892
Cost of sales
- intellectual
property licenses 11,449 6,569 45,002 40,114
Product development 18,203 11,900 56,971 40,960
Sales and marketing 16,002 19,096 100,646 86,161
General and administrative 9,171 11,407 46,479 44,008
---------- ------------ ----------- -----------
Total operating expenses 139,445 148,050 769,269 705,860
Operating income (loss) (14,444) 16,862 94,847 80,574
Investment income, net 2,006 622 8,560 2,546
Income (loss) before
provision (benefit)
for income taxes (12,438) 17,484 103,407 83,120
Provision (benefit)
for income taxes (4,481) 6,600 37,227 30,882
---------- ------------ ----------- -----------
Net income (loss) $ (7,957) $ 10,884 $ 66,180 $ 52,238
========== ========== ========== ===========
Basic earnings
(loss) per share $ (0.13) $ 0.20 $ 1.03 $ 1.03
Weighted average
common shares outstanding 62,939 54,921 64,159 50,651
Diluted earnings
(loss) per share $ (0.13) $ 0.17 $ 0.96 $ 0.88
Weighted average
common shares
outstanding assuming
dilution 62,939 62,599 69,103 59,455
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, March 31,
2003 2002
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ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 406,954 $ 279,007
Accounts receivable, net 15,822 76,733
Inventories 19,577 20,736
Software development 26,791 36,263
Intellectual property licenses 8,906 6,326
Deferred income taxes 38,290 22,608
Other current assets 10,565 15,200
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Total current assets 526,905 456,873
============= =============
Software development 35,281 3,254
Intellectual property licenses 36,943 10,899
Property and equipment, net 22,265 17,832
Deferred income taxes 10,322 28,795
Other assets 5,081 3,242
Goodwill 68,019 35,992
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Total assets $ 704,816 $ 556,887
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 147 $ 168
Accounts payable 45,602 64,410
Accrued expenses 58,656 59,096
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Total current liabilities 104,405 123,674
Long-term debt, less current portion 2,671 3,122
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Total liabilities 107,076 126,796
Shareholders' equity:
Common stock - -
Additional paid-in capital 592,295 397,528
Retained earnings 130,564 64,384
Treasury stock (121,685) (20,323)
Accumulated other
comprehensive loss (3,434) (11,498)
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Total shareholders' equity 597,740 430,091
Total liabilities and
shareholders' equity $ 704,816 $ 556,887
============ =============
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Year Ended March 31, 2003 and 2002
(Amounts in thousands)
Percent
Increase
Quarter Ended (Decrease)
March 31, 2003 March 31, 2002
Amount % of Total Amount % of Total
Geographic Revenue Mix
United States $ 52,217 42% $ 72,464 44% -28%
International 72,784 58% 92,448 56% -21%
------------ ---- ----------- ----- -----
Total net revenues $ 125,001 100% $ 164,912 100% -24%
Activity/Platform Mix
Publishing:
Console $ 56,197 71% $ 57,805 53% -3%
Hand-held 4,905 6% 17,699 17% -72%
PC 17,901 23% 32,809 30% -45%
------------ ---- ----------- ----- -----
Total publishing $ 79,003 63% $ 108,313 66% -27%
Distribution:
Console $ 36,264 79% $ 46,149 82% -21%
Hand-held 2,305 5% 3,787 6% -39%
PC 7,429 16% 6,663 12% 11%
------------ ---- ----------- ----- -----
Total distribution $ 45,998 37% $ 56,599 34% -19%
------------ ---- ----------- ----- -----
Total net revenues $ 125,001 100% $ 164,912 100% -24%
Percent
Increase
Year Ended (Decrease)
March 31, 2003 March 31, 2002
Amount % of Total Amount % of Total
Geographic Revenue Mix
United States $ 432,261 50% $ 404,905 51% 7%
International 431,855 50% 381,529 49% 13%
Total net revenues $ 864,116 100% $ 786,434 100% 10%
Activity/Platform Mix
Publishing:
Console $ 466,116 76% $ 312,986 57% 49%
Hand-held 49,966 8% 119,177 22% -58%
PC 99,893 16% 117,345 21% -15%
Total publishing $ 615,975 71% $ 549,508 70% 12%
Distribution:
Console $ 208,505 84% $ 167,709 71% 24%
Hand-held 14,103 6% 39,865 17% -65%
PC 25,533 10% 29,352 12% -13%
Total distribution $ 248,141 29% $ 236,926 30% 5%
Total net revenues $ 864,116 100% $ 786,434 100% 10%
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Year Ended March 31, 2003 and 2002
Quarter Ended Quarter Ended Year Ended Year Ended
March 31, 2003 March 31, 2002 March 31, 2003 March 31, 2002
Publishing Net Revenues
PC 23% 30% 16% 21%
- ----------------------------------- ------------- ------------ ---------- ----------
Console 71% 53% 76% 57%
- ----------------------------------- ------------- ------------ ---------- ----------
PlayStation 2 45% 14% 42% 20%
PlayStation 11% 14% 9% 21%
Microsoft Xbox 10% 21% 12% 6%
Nintendo GameCube 5% 1% 12% 3%
Nintendo 64 0% 2% 1% 6%
Sega Dreamcast 0% 1% 0% 1%
Hand-held 6% 17% 8% 22%
- ----------------------------------- ------------- ------------ ---------- ----------
Game Boy Advance 6% 14% 7% 15%
Game Boy Color 0% 3% 1% 7%
- ----------------------------------- ------------- ------------ ---------- ----------
Total publishing net revenues 100% 100% 100% 100%
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