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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) November 6, 2003
(November 6, 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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(Former Name or Former Address, if Changed Since Last Report)
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Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release of Activision, Inc., dated November 6, 2003.
Item 12. Results of Operations and Financial Condition.
On November 6, 2003, Activision, Inc. issued a press release
announcing its financial results for the fiscal quarter ended September 30,
2003. The press release is attached hereto as Exhibit 99.1.
The information in this Form 8-K and the Exhibit attached hereto shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, except as shall be expressly set forth by
specific reference in such filing.
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: November 6, 2003
ACTIVISION, INC.
By:/s/ Ronald Doornink
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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
ACTIVISION ANNOUNCES SECOND QUARTER RESULTS
Santa Monica, CA - November 6, 2003 - Activision, Inc. (Nasdaq: ATVI) today
announced financial results for the second fiscal quarter and the six-month
period ended September 30, 2003.
Net revenues were $117.5 million as compared to $169.2 million reported for
the second quarter last fiscal year. Net loss for the second fiscal quarter was
$10.1 million, or a loss per share of $0.11, compared with net income of $9.1
million, or $0.08 per diluted share, reported for the same period last year. The
company's results were down year over year due to a significantly smaller
release schedule.
Net revenues for the six-month period ended September 30, 2003, were $276.2
million, as compared to net revenues of $360.4 million reported for the
six-month period of last fiscal year. Net loss for the six-month period ended
September 30, 2003 was $5.9 million, or a loss per share of $0.07, compared with
net income of $29.8 million, or $0.29 per diluted share, reported for the
same period last year.
Ron Doornink, President of Activision said, "we had a light release
schedule for the second quarter, however, our main focus for this fiscal year
remains our third quarter releases - Tony Hawk's Underground(TM), True
Crime(TM): Streets of L.A.(TM), Call of Duty(TM) and Empires: Dawn of the Modern
World(TM), which represent some of the strongest, most innovative games in our
company's history. Overall our competitive position remains strong as we
continue to make progress with our quality enhancement initiatives.
Business Highlights
During the quarter, the company shipped Disney's Extreme Skate Adventure
for the PlayStation 2 computer entertainment system, Xbox video game console and
Nintendo(R)GameCube(TM) and Game Boy(R) Advance, Cabela's(R) Deer Hunt 2004
Season(TM) for the PlayStation 2 computer entertainment system and Xbox video
game console and LucasArts Entertainment's Jedi Knight: Jedi Academy(TM) for the
PC which Activision developed and publishes in Europe. Activision's quarterly
results were driven by newly released titles, as well as solid performance of
the company's catalog franchises including Spider-Man(TM), Tony Hawk's Pro
Skater(TM) and Return to Castle Wolfenstein(TM).
On October 30, 2003, Activision announced that it had exercised its option
to acquire the remaining 70% of outstanding common stock in Infinity Ward, the
developer of Activision's highly acclaimed PC game, Call of Duty.
Activision's product slate for the remainder of fiscal year 2004 includes
the recently released Tony Hawk's Underground, for the PlayStation 2 computer
entertainment system, Xbox video game console, GameCube and Game Boy Advance,
which is being supported by the biggest marketing and advertising campaign in
Activision's history; the highly anticipated True Crime: Streets of L.A., for
the PlayStation 2 computer entertainment system, Xbox video game console and
GameCube platform, which garnered more pre-orders than any game in the company's
history; and Call of Duty, which received a 93 rating by industry leading PC
Gamer Magazine and Empires: Dawn of the Modern World(TM) for the PC.
Titles slated for release after the holiday season include MTX:
Mototrax(TM) for the PlayStation 2 computer entertainment system, Xbox video
game console and GameCube, Pitfall(TM) for the PlayStation 2 computer
entertainment system, Xbox video game console, GameCube and Game Boy Advance and
Tencho(R) Return from Darkness(TM) for the Xbox video game console.
Activision also announced that the company is modifying its full fiscal
year 2004 and third and fourth quarter outlook. The company is raising its
outlook for net revenue for the full fiscal year by $30 million to $780 million,
while at the same time it is moving Doom 3 into its next fiscal year for
planning purposes. However, the company is taking a one-time, pre-tax charge of
approximately $23 million in the third quarter related to product cancellations
including the previously announced titles Trinity(TM), Shaun Palmer's Pro
Snowboarder 2(TM) and the sequel to Street Hoop's(TM). The after-tax effect of
this change amounts to approximately $0.16 per diluted share. The company's
previously provided outlook for fiscal year 2004 earnings per diluted share was
$0.47. The company now expects earnings per diluted share of $0.34 for the
fiscal year ending March 31, 2004, which includes the charge.
The company is raising its outlook for third quarter net revenue of $390
million and expects earnings per diluted share of $0.45, which includes the
one-time charge. For the fourth quarter, the company expects net revenues of
$114 million and a loss per share of $0.05.
Doornink added, "The video game market is increasingly dominated by
high-quality products based on recognizable franchises supported with big
marketing programs. We have decided to take steps to align our business with the
continuing evolution of the video game market. Specifically, we have canceled
the development of 10 games, which we believe are unlikely to produce an
acceptable level of return on our investment. This will enable us to focus and
increase our development and marketing resources on those franchises with the
greatest potential. We believe that this realignment will enhance our position
to capitalize on the opportunities presented by the growing mass-market
installed base of hardware platforms.
Activision's fiscal year 2005 game slate includes Spider-Man 2(TM), Shrek
2(TM), DOOM 3(TM), Lemony Snicket's: A Series of Unfortunate Events(TM),
Dreamworks' A Shark's Tale(TM), Call of Duty(TM): Finest Hour(TM), Vampire(R)
The Masquerade - Bloodlines(TM), Rome: Total War(TM), Peter Molyneux's The
Movies(TM) and X-Men(TM): Legends(TM).
Headquartered in Santa Monica, California, Activision, Inc. is a leading
worldwide developer, publisher and distributor of interactive entertainment and
leisure products. Founded in 1979, Activision posted net revenues of $864
million for the fiscal year ended March 31, 2003.
Activision maintains operations in the U.S., Canada, the United Kingdom,
France, Germany, Japan, Australia, Scandinavia and the Netherlands. More
information about Activision and its products can be found on the company's
World Wide Web site, which is located at www.activision.com.
Note: The statements made in this press release that are not historical facts
are forward looking statements. Although the company believes that its plans,
intentions and expectations reflected in such forward-looking statements are
reasonable, a number of important factors could cause our actual future results
to differ materially from those expressed in any such forward-looking
statements.
Such factors include, without limitation, product delays, retail acceptance of
our products, industry competition, rapid changes in technology and industry
standards, protection of proprietary rights, maintenance of relationships with
key personnel, vendors and third party developers, international economic and
political conditions, integration of recently acquired subsidiaries and
identification of suitable future acquisition opportunities.
These important factors and other factors that potentially could affect the
company's financial results are described in our filings with the Securities and
Exchange Commission, including the company's most recent Annual Report on Form
10 K and Quarterly Reports on Form 10-Q.
(Tables to Follow)
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Six months
Quarter ended September 30, ended September 30,
2003 2002 2003 2002
Restated Restated
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Net revenues $ 117,523 $ 169,172 $ 276,248 $ 360,430
Costs and expenses:
Cost of sales
- product costs 72,391 80,779 149,001 164,123
Cost of sales
- software royalties
and amortization 11,397 18,055 26,895 33,893
Cost of sales
- intellectual
property licenses 7,401 5,143 17,544 17,786
Product development 15,894 13,259 29,474 25,010
Sales and marketing 17,237 28,776 43,522 50,769
General and administrative 10,136 11,826 21,599 26,319
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Total operating expenses 134,456 157,838 288,035 317,900
Operating income (loss) (16,933) 11,334 (11,787) 42,530
Investment income, net 1,404 2,865 2,661 4,021
Income (loss) before
provision (benefit)
for income taxes (15,529) 14,199 (9,126) 46,551
Provision (benefit)
for income taxes (5,436) 5,113 (3,196) 16,761
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Net income (loss) $ (10,093) $ 9,086 $ (5,930) $ 29,790
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Basic earnings
(loss) per share $ (0.11) $ 0.09 $ (0.07) $ 0.31
Weighted average
common shares outstanding 88,162 100,172 88,105 94,587
Diluted earnings
(loss) per share $ (0.11) $ 0.08 $ (0.07) $ 0.29
Weighted average
common shares
outstanding assuming
dilution 88,162 108,731 88,105 103,916
Share and earnings per share data have been restated to reflect our
three-for-two stock split for shareholders of record as of May 16, 2003, paid
June 6, 2003.
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, March 31,
2003 2003
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ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 411,436 $ 406,954
Accounts receivable, net 29,502 15,822
Inventories 21,163 19,577
Software development 63,109 26,791
Intellectual property licenses 17,239 8,906
Deferred income taxes 32,375 38,290
Other current assets 23,099 10,565
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Total current assets 597,923 526,905
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Software development 23,665 35,281
Intellectual property licenses 24,987 36,943
Property and equipment, net 26,562 22,265
Deferred income taxes 20,300 10,322
Other assets 1,893 5,081
Goodwill 67,726 68,019
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Total assets $ 763,056 $ 704,816
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ - $ 147
Accounts payable 49,015 45,602
Accrued expenses 49,947 58,656
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Total current liabilities 98,962 104,405
Long-term debt, less current portion - 2,671
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Total liabilities 98,962 107,076
Shareholders' equity:
Common stock - -
Additional paid-in capital 681,233 592,295
Retained earnings 124,634 130,564
Treasury stock (142,946) (121,685)
Accumulated other
comprehensive loss 1,173 (3,434)
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Total shareholders' equity 664,094 597,740
Total liabilities and
shareholders' equity $ 763,056 $ 704,816
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ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Six Months Ended September 30, 2003 and 2002
(Amounts in thousands)
Percent
Increase
Quarter Ended (Decrease)
September 30, 2003 September 30, 2002
Amount % of Total Amount % of Total
Geographic Revenue Mix
United States $ 46,450 40% $ 93,298 55% -50%
International 71,073 60% 75,874 45% -6%
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Total net revenues $ 117,523 100% $ 169,172 100% -31%
Activity/Platform Mix
Publishing:
Console $ 46,019 64% $ 83,766 66% -45%
Hand-held 4,187 6% 14,797 12% -72%
PC 21,590 30% 28,535 22% -24%
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Total publishing $ 71,796 61% $ 127,098 75% -44%
Distribution:
Console $ 33,188 73% $ 33,600 80% -1%
Hand-held 4,730 10% 3,141 7% 51%
PC 7,809 17% 5,333 13% 46%
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Total distribution $ 45,727 39% $ 42,074 25% 9%
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Total net revenues $ 117,523 100% $ 169,172 100% -31%
Percent
Increase
Six Months Ended (Decrease)
September 30, 2003 September 30, 2002
Amount % of Total Amount % of Total
Geographic Revenue Mix
United States $ 129,189 47% $ 200,402 56% -36%
International 147,059 53% 160,028 44% -8%
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Total net revenues $ 276,248 100% $ 360,430 100% -23%
Activity/Platform Mix
Publishing:
Console $ 134,503 72% $ 197,926 71% -32%
Hand-held 8,783 5% 25,487 9% -66%
PC 42,915 23% 56,830 20% -24%
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Total publishing $ 186,201 67% $ 280,243 78% -34%
Distribution:
Console $ 68,530 76% $ 63,706 80% 8%
Hand-held 7,642 9% 5,740 7% 33%
PC 13,875 15% 10,741 13% 29%
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Total distribution $ 90,047 33% $ 80,187 22% 12%
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Total net revenues $ 279,248 100% $ 360,430 100% -23%
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ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Six Months Ended September 30, 2003 and 2002
Quarter Ended Quarter Ended Six Months Ended Year Ended
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
Publishing Net Revenues
PC 30% 22% 23% 20%
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Console 64% 66% 72% 71%
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PlayStation 2 32% 37% 35% 36%
Microsoft Xbox 18% 12% 26% 12%
PlayStation 10% 9% 6% 7%
Nintendo GameCube 4% 5% 5% 15%
Nintendo 64 0% 3% 0% 1%
Hand-held 6% 12% 5% 9%
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Game Boy Advance 5% 11% 5% 8%
Game Boy Color 1% 1% 0% 1%
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Total publishing net revenues 100% 100% 100% 100%
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