Date of report (Date of earliest event reported):  April 15, 2009



(Exact Name of Registrant as Specified in Charter)







(State or Other Jurisdiction of Incorporation)


(Commission File Number)


(IRS Employer
Identification No.)






3100 Ocean Park Boulevard, Santa
Monica, CA



(Address of Principal Executive Offices)


(Zip Code)


Registrant’s telephone number, including area code:  (310) 255-2000



(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02.              Results of Operations and Financial Conditions.


On April 16, 2009, Activision Blizzard, Inc. (the “Company”) issued a press release containing information about its net revenue and earnings per diluted share for the fiscal first quarter ended March 31, 2009. A copy of the press release is attached here to as Exhibit 99.1.


Non-GAAP Financial Measures


The Company provides net revenues and earnings (loss) per share  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; the Company’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.  Please refer to the table at the back of the press release for a reconciliation to GAAP of the Company's non-GAAP financial measures.


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.


The Company recognizes that there are limitations associated with the use of these non-GAAP financial measures as they do not reflect net revenues and earnings (loss) per share 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 the Company’s GAAP as well as non-GAAP results and outlook and, in the press release, by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, 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 the Company’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 the Company’s operating performance, and when planning, forecasting and analyzing future periods.


Management also believes that non-GAAP measures that exclude the Company’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 the Company. 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 and non-GAAP earnings per share 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 the Company’s performance in relation to other companies.


Certain Information Not Filed.


The information in this Item 2.02 and Exhibit 99.1 attached to this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall this Item 2.02 or such Exhibit 99.1 or any of the information contained therein be deemed incorporated by reference in any filing under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.


Item 5.02.              Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain  Officers.


(e)     On April 15, 2009, the Company entered into an amendment to Thomas Tippl’s employment agreement setting forth the terms under which Mr. Tippl, the Company’s Chief Financial Officer, will serve as the Company’s Chief Corporate Officer and Chief Financial Officer (the “Amendment”).


Pursuant to the Amendment, which is effective as of February 15, 2009, the term of Mr. Tippl’s employment with the Company under his agreement will expire on April 15, 2014.  Mr. Tippl’s annual base salary will initially be $750,000 per year and will be increased annually in an amount at least equal to the average percentage increase approved by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) for members of the executive leadership team, excluding any increases guaranteed by contract or due to an executive’s significant promotion or modification in duties.  Mr. Tippl will be eligible to receive an annual bonus with a target amount of 100% of his base salary based upon achievement of financial and business objectives determined by the Compensation Committee.


Pursuant to the Amendment, Mr. Tippl will receive a grant of 1,200,000 stock options and 150,000 shares of restricted stock.  The options and restricted stock will vest ratably over the first five anniversaries of the effective date of the Amendment.  Mr. Tippl will also receive a grant of 80,000 performance shares, which will vest in their entirety on the first anniversary of the effective date subject to the Company attaining a specified non-GAAP earnings per share target.  These equity awards will be subject to the terms of the Activision Blizzard, Inc. 2008 Incentive Plan and the Company’s standard forms of employee award agreements.


The Amendment assigns the employment agreement, which was originally with Activision Publishing, Inc., to the Company.


Item 9.01.              Financial Statements and Exhibits.


(d)  Exhibits


99.1         Press Release dated April 16, 2009 (furnished not filed)






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: April 17, 2009








/s/ George L. Rose



George L. Rose



Chief Legal Officer and Secretary






Exhibit No.








Press Release dated April 16, 2009 (furnished not filed)



Exhibit 99.1





Kristin Southey


Vice President, Investor Relations


(310) 255-2635






Maryanne Lataif


Senior Vice President, Corporate Communications


(310) 255-2704






Santa Monica, CA — April 16, 2009 — Due to the better-than-expected performance of its titles at retail, Activision Blizzard (Nasdaq: ATVI) announced today that its March quarter net revenues and earnings per diluted share are tracking ahead of the company’s prior outlook.  On February 11, 2009, the company provided an outlook for the March quarter of $860 million in GAAP net revenues and GAAP earnings per diluted share of $0.08.  On a non-GAAP basis, on February 11, 2009, the company provided an outlook of $550 million in net revenues and earnings per diluted share of $0.03.


“Global consumer response to the Call of Duty® and Guitar Hero® franchises and Blizzard Entertainment’s World of Warcraft® remains strong despite the challenging economic environment,” said Robert Kotick, CEO of Activision Blizzard. “We exceeded our quarterly financial goals as the video game market continues to grow and our franchises continue to perform.  This bodes well for our upcoming spring titles Transformers™: Revenge of the Fallen, X-Men Origins: Wolverine™ and Ice Age™: Dawn of the Dinosaurs, which are inspired by theatrical feature films releases, Prototype™, a new intellectual property, and the release of Guitar Hero Smash Hits™ as well as continued sales of our recently released Guitar Hero Metallica® game.




Separately today, Blizzard Entertainment announced that World of Warcraft® will be licensed to an affiliated company of NetEase.com, Inc. in mainland China following the expiration of its current license agreement.


Kotick added, “Regarding Blizzard Entertainment’s announcement earlier today, planning is well underway for the World of Warcraft transition to NetEase.  We believe this new relationship will promote a consistent level of quality and service in mainland China for each of the games that Blizzard Entertainment is partnering with NetEase on, including Warcraft® III and StarCraft® II, as announced last year.  In addition, we believe this new relationship positions us well for the long-term, and despite the near-term impact of the transition, we are reaffirming our calendar 2009 financial outlook.”


On February 11, 2009, Activision Blizzard provided a calendar year outlook on a GAAP basis of $4.2 billion in net revenues and earnings per diluted share of $0.22 and on a non-GAAP basis of $4.7 billion in net revenues and earnings per diluted share of $0.61.


Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide 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, Australia, India, Russia, 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 financial forecasts and statements about the World of Warcraft transition, 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, any difficulties experienced during the transition of World of Warcraft in China from our current licensee to NetEase, 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 annual report on Form 10-K for year ended December 31, 2008. 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.  Activision Blizzard disclaims any obligation to update any forward-looking statements contained herein.




(Table to Follow)




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)














Excluding the impacts of:






Change in deferred net revenues












Non-GAAP Net Revenues














Earnings Per Diluted Share (GAAP)














Excluding the impacts of:






Change in deferred net revenues and related cost of sales






Equity based compensation (including purchase price accounting related adjustments)






Results of products and operations that the company has exited or is winding down






One time costs related to the Vivendi transaction, integration and restructuring






Amortization of intangibles and purchase price accounting related adjustments












Non-GAAP Earnings Per Diluted Share









(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.