Exhibit 99.1

 

ACTIVISION BLIZZARD ANNOUNCES SECOND QUARTER 2013 FINANCIAL RESULTS

 

Company Was #1 Third-Party Publisher With The Top Two Best-Selling Games in North America and Europe Combined For First Six Months of 2013(1)

 

Santa Monica, CA — August 1, 2013 — Activision Blizzard, Inc. (Nasdaq: ATVI) today announced financial results for the second quarter of 2013.

 

		Second Quarter
(in millions, except EPS)		2013			Prior Outlook*			2012
GAAP
Net Revenues		$	1,050		$	980		$	1,075
EPS		$	0.28		$	0.21		$	0.16
Non-GAAP
Net Revenues		$	608		$	590		$	1,054
EPS		$	0.08		$	0.05		$	0.20

 

*Prior outlook was provided by the company on May 8, 2013 in its earnings release

 

For the quarter ended June 30, 2013, Activision Blizzard’s GAAP net revenues were $1.05 billion, as compared with $1.08 billion for the second quarter of 2012.  On a non-GAAP basis, the company’s net revenues were $608 million, as compared with $1.05 billion for the second quarter of 2012.  For the second quarter, GAAP net revenues from digital channels were $387 million and represented 37% of the company’s total revenues.  On a non-GAAP basis, net revenues from digital channels were $383 million and represented a record 63% of the company’s total revenues.

 

For the quarter ended June 30, 2013, Activision Blizzard’s GAAP earnings per diluted share were $0.28, as compared with $0.16 for the second quarter of 2012.  On a non-GAAP basis, the company’s earnings per diluted share were $0.08, as compared with $0.20 for the second quarter of 2012.

 

The company reports results on both a GAAP and a non-GAAP basis.  Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.

 

1

Activision Announces Q2 2013 Earnings Results

 

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, “We are pleased with our second-quarter results, which confirm the preliminary results we released last week when we announced our transaction with Vivendi. The agreement we reached with Vivendi will make us an independent company and should deliver meaningful earnings per share accretion to our shareholders. Our solid performance across our franchises and strong digital sales, including continued significant growth this quarter in our Call of Duty® downloadable content business over the previous year, validate our belief that we will enter this new period of independence in a position to leverage the flexibility and focus that it provides.”

 

Kotick added, “On a GAAP and non-GAAP basis, we delivered strong quarterly and first half net revenues, operating income, and earnings.  Year to date, we generated a record $434 million in operating cash flow. However, despite this strength in the front half of the year, we remain cautious about the back half. The issues we previously identified, including increased competition in the second half of the year and uncertainties surrounding the console transition, remain on the horizon. We are confident that we will continue to successfully navigate industry challenges and find new opportunities to provide superior returns to our shareholders.”

 

Selected Business Highlights:

 

·                  For the first six months of 2013, Activision Blizzard was the #1 third-party publisher in North America and Europe combined.(1)

 

·                  For the first six months of 2013, Activision Blizzard had the top-two best-selling games in North America and Europe combined, with Activision Publishing’s Skylanders® Giants™ and Call of Duty: Black Ops II.(1)

 

·                  In both North America and Europe, Activision Publishing’s Skylanders Giants was the #1 best-selling console and hand-held game overall in dollars for the first six months of 2013.(1)

 

·                  As of July 31, 2013, the Skylanders franchise has generated, life-to-date, more than $1.5 billion in worldwide retail sales.(1)

 

·                  As of June 30, 2013, Blizzard Entertainment’s World of Warcraft® remains the #1 subscription-based MMORPG, with approximately 7.7 million subscribers.(2)

 

·                  On July 25, 2013, Activision Blizzard announced that it reached an agreement under which the company will acquire approximately 429 million company shares and certain tax attributes from Vivendi, in exchange for approximately $5.83 billion in cash, or $13.60 per share acquired before taking into account any future benefit from these tax attributes. In a related transaction, ASAC II LP, an investment vehicle led by CEO Bobby Kotick and Activision Blizzard Co-Chairman Brian Kelly, will purchase approximately 172 million company shares from Vivendi for approximately $2.34 billion in cash, or $13.60 per share.  Following the completion of the transactions, which are expected to close by the end of September 2013, Vivendi will no longer be the majority shareholder, but will retain a stake of approximately 83 million shares, or approximately 12%.

 

2

 

Activision Announces Q2 2013 Earnings Results

 

·                  During the quarter, Activision Blizzard paid a cash dividend of $0.19 per common share, totaling $216 million, to shareholders of record at the close of business on March 20, 2013.

 

Company Outlook:

 

On July 2, 2013, Activision Publishing released Call of Duty: Black Ops II Vengeance, a downloadable map pack for the Xbox 360® video game system from Microsoft.  The company expects to release Call of Duty: Black Ops II Vengeance on other platforms later in the third quarter of 2013.

 

On September 3, 2013, Blizzard Entertainment expects to release Diablo® III for Sony’s PlayStation® 3 computer entertainment system and the Xbox 360 video game system from Microsoft.

 

Based on its second quarter results, Activision Blizzard is raising its full year GAAP outlook. The company’s third quarter and full year net revenue and earnings per share outlook are as follows and do not include any potential impact from the transaction with Vivendi announced on July 25, 2013 and described above:

 

(in millions, except EPS)		GAAP  Outlook			Prior* GAAP  Outlook			Non-GAAP  Outlook			Prior* Non- GAAP  Outlook
CY 2013
Net Revenues		$	4,310		$	4,220		$	4,250		$	4,250
EPS		$	0.77		$	0.73		$	0.82		$	0.82
Q3 2013
Net Revenues		$	635		n/a			$	585		n/a
EPS		$	0.03		n/a			$	0.03		n/a

 

* Prior outlook was provided by the company on May 8, 2013 in its earnings release

 

3

 

Activision Announces Q2 2013 Earnings Results

 

The company estimates that, if and when completed, the recently announced transaction with Vivendi will be accretive to full year pro-forma earnings per share.  For additional information and pro-forma results, please refer to the table at the back of this press release.

 

Conference Call

 

Today at 4:30 p.m. EDT, Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter ended June 30, 2013 and management’s outlook for the remainder of the calendar year. 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 888-339-3466 in the U.S. with passcode 3585535.

 

About Activision Blizzard

 

Activision Blizzard, Inc. is the world’s largest and most profitable independent interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty, Skylanders,World of Warcraft, StarCraft® and Diablo. Headquartered in Santa Monica California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world. More information about Activision Blizzard and its products can be found on the company’s website, www.activisionblizzard.com.

 

(1) According to The NPD Group and Gfk Chart-Track and Activision Blizzard internal estimates, including toys and accessories

(2) According to Activision Blizzard internal estimates

 

Subscriber Definition:  World of Warcraft subscribers include individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees’ territories are defined along the same rules.

 

Non-GAAP Financial Measures:  As a supplement to our financial measures presented in accordance with Generally Accepted Accounting Principles (“GAAP”), Activision Blizzard presents certain non-GAAP measures of financial performance. These non-GAAP financial measures are not intended to be considered in isolation from, as a substitute for, or as more important than, the financial information prepared and presented in accordance with GAAP.  In addition, these non-GAAP measures have limitations in that they do not reflect all of the items associated with the company’s results of operations as determined in accordance with GAAP.

 

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) certain items. The non-GAAP financial measures exclude the following items, as applicable in any given reporting period:

 

4

 

Activision Announces Q2 2013 Earnings Results

 

·                  the change in deferred net revenue and related cost of sales with respect to certain of the company’s online-enabled games;

·                  expenses related to stock-based compensation;

·                  the amortization of intangibles from purchase price accounting;

·                  one-time fees and expenses related to repurchase of the Company’s shares from Vivendi and related debt financing transactions; and

·                  the income tax adjustments associated with any of the above items.

 

In the future, Activision Blizzard may also consider whether other significant non-recurring items should also be excluded in calculating the non-GAAP financial measures used by the company.  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.  In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard by excluding certain items that may not be indicative of the company’s core business, operating results or future outlook.  Internally, management uses these non-GAAP financial measures in assessing the company’s operating results, as well as in planning and forecasting.

 

Activision Blizzard’s 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, and 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.

 

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP, results and outlook, and by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

 

In addition to the reasons stated above, which are generally applicable to each of the items Activision Blizzard excludes from its non-GAAP financial measures, there are additional specific reasons why the company believes it is appropriate to exclude the change in deferred net revenue and related cost of sales with respect to certain of the company’s online-enabled games.

 

Since Activision Blizzard has determined that some of our games’ online functionality represents an essential component of gameplay and, as a result, a more-than-inconsequential separate deliverable, we recognize revenue attributed to these game titles over their estimated service periods, which may range from five months to a maximum of less than a year. The related cost of sales is deferred and recognized as the related revenues are recognized. Internally, management excludes the impact of this change in deferred net revenue and related cost of sales in its non-GAAP financial measures when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.

 

Management believes this is appropriate because doing so enables an analysis of performance based on the timing of actual transactions with our customers, which is consistent with the way the company is measured by investment analysts and industry data sources. In addition, excluding the change in deferred net revenue and the related cost of sales provides a much more timely indication of trends in our operating results.

 

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,”  “could,” “should,” “would,” “might,” “to be,” “plans,” “believes,” “may,” “expects,” “intends,” “anticipates,” “estimate,” “future,” “plan,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming” and similar expressions to identify forward-looking statements.

 

5

 

Activision Announces Q2 2013 Earnings Results

 

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, increasing concentration of titles, shifts in consumer spending trends, the impact of the current macroeconomic environment, Activision Blizzard’s ability to predict consumer preferences, including interest in specific genres such as first-person action and massively multiplayer online games and preferences among hardware platforms, the seasonal and cyclical nature of the interactive game market, changing business models including digital delivery of content, competition, including from used games and other forms of entertainment, possible declines in software pricing, product returns and price protection, product delays, adoption rate and availability of new hardware (including peripherals) and related software, particularly during the upcoming console transition, rapid changes in technology and industry standards, the current regulatory environment, litigation risks and associated costs, protection of proprietary rights, maintenance of relationships with key personnel, customers, licensees, licensors, vendors, and third-party developers, including the ability to attract, retain and develop key personnel and developers that can create high quality “hit” titles, counterparty risks relating to customers, licensees, licensors and manufacturers, domestic and international economic, financial and political conditions and policies, foreign exchange rates and tax rates, the identification of suitable future acquisition opportunities and potential challenges associated with geographic expansion, capital market risks, the possibility that expected benefits related to the pending transactions with Vivendi and ASAC II LP may not materialize as expected, the pending transactions not being timely completed, if completed at all, and the other factors identified in the risk factors section of Activision Blizzard’s most recent annual report on Form 10-K, as amended and our quarterly report on Form 10-Q for the quarter ended June 30, 2013,.   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.  Although these forward-looking statements are believed to be true when made, they 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)

 

For Information Contact:
Kristin Southey	Maryanne Lataif
SVP, Investor Relations	SVP, Corporate Communications
(310) 255-2635	(310) 255-2704
ksouthey@activision.com	mlataif@activision.com

 

6

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in millions, except per share data)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Net revenues:
Product sales		$	727		$	798		$	1,717		$	1,672
Subscription, licensing and other revenues (1)		323			277			658			575
Total net revenues		1,050			1,075			2,375			2,247
Costs and expenses:
Cost of sales - product costs		179			229			440			486
Cost of sales - online subscriptions		54			71			111			140
Cost of sales - software royalties and amortization		38			57			99			88
Cost of sales - intellectual property licenses		14			20			52			27
Product development		123			145			247			259
Sales and marketing		116			136			223			216
General and administrative		96			190			186			291
Total costs and expenses		620			848			1,358			1,507
Operating income		430			227			1,017			740
Investment and other income (expense), net		—			2			3			3
Income before income tax expense		430			229			1,020			743
Income tax expense		106			44			240			174
Net income		$	324		$	185		$	780		$	569
Basic earnings per common share		$	0.28		$	0.16		$	0.68		$	0.50
Weighted average common shares outstanding		1,118			1,109			1,116			1,115
Diluted earnings per common share (2)		$	0.28		$	0.16		$	0.68		$	0.50
Weighted average common shares outstanding assuming dilution		1,127			1,115			1,124			1,121

 

(1) Subscription, licensing and other revenues represents revenues from World of Warcraft subscriptions, Call of Duty Elite memberships, licensing royalties from our products and franchises, value-added services, downloadable content, and other miscellaneous revenues.

(2) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. We had, on a weighted-average basis, participating securities of approximately 24 million and 25 million for the three and six months ended June 30, 2013, respectively. We had, on a weighted-average basis, participating securities of approximately 24 million and 22 million for the three and six months ended June 30, 2012, respectively.  Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $318 million and $764 million for the three and six months ended June 30, 2013 as compared to the total net income of $324 million and $780 million for the same periods, respectively. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate earnings per common share assuming dilution was $181 million and $558 million for the three and six months ended June 30, 2012 as compared to total net income of $185 million and $569 million for the same periods, respectively.

 

7

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions)

 

		June 30,			December 31,
		2013			2012
ASSETS
Current assets:
Cash and cash equivalents		$	4,341		$	3,959
Short-term investments		205			416
Accounts receivable, net		117			707
Inventories, net		131			209
Software development		304			164
Intellectual property licenses		11			11
Deferred income taxes, net		335			487
Other current assets		185			321
Total current assets		5,629			6,274
Long-term investments		9			8
Software development		35			129
Intellectual property licenses		—			30
Property and equipment, net		132			141
Other assets		10			11
Intangible assets, net		61			68
Trademark and trade names		433			433
Goodwill		7,102			7,106
Total assets		$	13,411		$	14,200
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	139		$	343
Deferred revenues		665			1,657
Accrued expenses and other liabilities		389			652
Total current liabilities		1,193			2,652
Deferred income taxes, net		77			25
Other liabilities		206			206
Total liabilities		1,476			2,883
Shareholders’ equity:
Common stock		—			—
Additional paid-in capital		9,541			9,450
Retained earnings		2,456			1,893
Accumulated other comprehensive income (loss)		(62		)	(26		)
Total shareholders’ equity		11,935			11,317
Total liabilities and shareholders’ equity		$	13,411		$	14,200

 

8

 

 

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except earnings per share data)

 

Three months ended June 30, 2013			Net Revenues			Cost of Sales - Product Costs			Cost of Sales - Online Subscriptions			Cost of Sales - Software Royalties and Amortization			Cost of Sales - Intellectual Property Licenses			Product Development			Sales and Marketing			General and Administrative			Total Costs and Expenses
GAAP Measurement			$	1,050		$	179		$	54		$	38		$	14		$	123		$	116		$	96		$	620
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(442		)	(77		)	—			(26		)	(1		)	—			—			—			(104		)
Less: Stock-based compensation	(b)		—			—			—			(3		)	—			(7		)	(2		)	(12		)	(24		)
Less: Amortization of intangible assets	(c)		—			—			—			—			(3		)	—			—			—			(3		)
Non-GAAP Measurement			$	608		$	102		$	54		$	9		$	10		$	116		$	114		$	84		$	489
Three months ended June 30, 2013			Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement			$	430		$	324		$	0.28		$	0.28
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(338		)	(251		)	(0.22		)	(0.22		)
Less: Stock-based compensation	(b)		24			15			0.01			0.01
Less: Amortization of intangible assets	(c)		3			2			—			—
Non-GAAP Measurement			$	119		$	90		$	0.08		$	0.08
Six months ended June 30, 2013			Net Revenues			Cost of Sales - Product Costs			Cost of Sales - Online Subscriptions			Cost of Sales - Software Royalties and Amortization			Cost of Sales - Intellectual Property Licenses			Product Development			Sales and Marketing			General and Administrative			Total Costs and Expenses
GAAP Measurement			$	2,375		$	440		$	111		$	99		$	52		$	247		$	223		$	186		$	1,358
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(962		)	(192		)	—			(60		)	(3		)	—			—			—			(255		)
Less: Stock-based compensation	(b)		—			—			—			(8		)	—			(13		)	(4		)	(25		)	(50		)
Less: Amortization of intangible assets	(c)		—			—			—			—			(6		)	—			—			—			(6		)
Non-GAAP Measurement			$	1,413		$	248		$	111		$	31		$	43		$	234		$	219		$	161		$	1,047
Six months ended June 30, 2013			Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement			$	1,017		$	780		$	0.68		$	0.68
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(707		)	(528		)	(0.46		)	(0.46		)
Less: Stock-based compensation	(b)		50			32			0.03			0.03
Less: Amortization of intangible assets	(c)		6			4			—			—
Non-GAAP Measurement			$	366		$	288		$	0.25		$	0.25

 

(a) Reflects the net change in deferred net revenues and related cost of sales.

(b) Includes expense related to stock-based compensation.

(c) Reflects amortization of intangible assets from purchase price accounting.

 

The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $88 million and $282 million for the three and six months ended June 30, 2013 as compared to the total non-GAAP net income of $90 million and $288 million for the same periods, respectively.

 

The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated.  The sum of these measures, as presented, may differ due to the impact of rounding.

 

9

 

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except earnings per share data)

 

Three months ended June 30, 2012			Net Revenues			Cost of Sales - Product Costs			Cost of Sales - Online Subscriptions			Cost of Sales - Software Royalties and Amortization			Cost of Sales - Intellectual Property Licenses			Product Development			Sales and Marketing			General and Administrative			Total Costs and Expenses
GAAP Measurement			$	1,075		$	229		$	71		$	57		$	20		$	145		$	136		$	190		$	848
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(21		)	(61		)	—			—			—			—			—			—			(61		)
Less: Stock-based compensation	(b)		—			—			—			(3		)	—			(5		)	(1		)	(22		)	(31		)
Less: Amortization of intangible assets	(c)		—			—			—			—			(2		)	—			—			—			(2		)
Non-GAAP Measurement			$	1,054		$	168		$	71		$	54		$	18		$	140		$	135		$	168		$	754
Three months ended June 30, 2012			Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement			$	227		$	185		$	0.16		$	0.16
Less: Net effect from deferral in net revenues and related cost of sales	(a)		40			17			0.02			0.02
Less: Stock-based compensation	(b)		31			21			0.02			0.02
Less: Amortization of intangible assets	(c)		2			1			—			—
Non-GAAP Measurement			$	300		$	224		$	0.20		$	0.20
Six months ended June 30, 2012			Net Revenues			Cost of Sales - Product Costs			Cost of Sales - Online Subscriptions			Cost of Sales - Software Royalties and Amortization			Cost of Sales - Intellectual Property Licenses			Product Development			Sales and Marketing			General and Administrative			Total Costs and Expenses
GAAP Measurement			$	2,247		$	486		$	140		$	88		$	27		$	259		$	216		$	291		$	1,507
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(606		)	(181		)	—			(17		)	(1		)	—			—			—			(199		)
Less: Stock-based compensation	(b)		—			—			—			(6		)	—			(9		)	(4		)	(33		)	(52		)
Less: Amortization of intangible assets	(c)		—			—			—			—			(5		)	—			—			—			(5		)
Non-GAAP Measurement			$	1,641		$	305		$	140		$	65		$	21		$	250		$	212		$	258		$	1,251
Six months ended June 30, 2012			Operating Income			Net Income			Basic Earnings per Share			Diluted Earnings per Share
GAAP Measurement			$	740		$	569		$	0.50		$	0.50
Less: Net effect from deferral in net revenues and related cost of sales	(a)		(407		)	(317		)	(0.28		)	(0.28		)
Less: Stock-based compensation	(b)		52			36			0.03			0.03
Less: Amortization of intangible assets	(c)		5			3			—			—
Non-GAAP Measurement			$	390		$	291		$	0.26		$	0.25

 

(a) Reflects the net change in deferred net revenues and related cost of sales.

(b) Includes expense related to stock-based compensation.

(c) Reflects amortization of intangible assets from purchase price accounting.

 

The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Activision Blizzard Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $219 million and $285 million for the three and six months ended June 30, 2012 as compared to total non-GAAP net income of $224 million and $291 million for the same periods, respectively.

 

The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated.  The sum of these measures, as presented, may differ due to the impact of rounding.

 

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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Three And Six Months Ended June 30, 2013 and 2012

(Amounts in millions)

 

		Three Months Ended
		June 30, 2013					June 30, 2012					$ Increase			% Increase
		Amount			% of Total(4)		Amount			% of Total(4)		(Decrease)			(Decrease)
GAAP Net Revenues by Distribution Channel
Retail channels		$	626		60	%	$	685		64	%	$	(59	)	(9	)%
Digital online channels(1)		387			37		343			32		44			13
Total Activision and Blizzard		1,013			96		1,028			96		(15		)	(1	)
Distribution		37			4		47			4		(10		)	(21	)
Total consolidated GAAP net revenues		1,050			100		1,075			100		(25		)	(2	)
Change in Deferred Net Revenues(2)
Retail channels		(438		)			(175		)
Digital online channels(1)		(4		)			154
Total changes in deferred net revenues		(442		)			(21		)
Non-GAAP Net Revenues by Distribution Channel
Retail channels		188			31		510			48		(322		)	(63	)
Digital online channels(1)		383			63		497			47		(114		)	(23	)
Total Activision and Blizzard		571			94		1,007			96		(436		)	(43	)
Distribution		37			6		47			4		(10		)	(21	)
Total non-GAAP net revenues(3)		$	608		100	%	$	1,054		100	%	$	(446	)	(42	)%

 

		Six Months Ended
		June 30, 2013					June 30, 2012					$ Increase			% Increase
		Amount			% of Total(4)		Amount			% of Total(4)		(Decrease)			(Decrease)
GAAP Net Revenues by Distribution Channel
Retail channels		$	1,522		64	%	$	1,479		66	%	$	43		3	%
Digital online channels(1)		765			32		656			29		109			17
Total Activision and Blizzard		2,287			96		2,135			95		152			7
Distribution		88			4		112			5		(24		)	(21	)
Total consolidated GAAP net revenues		2,375			100		2,247			100		128			6
Change in Deferred Net Revenues(2)
Retail channels		(1,009		)			(746		)
Digital online channels(1)		47					140
Total changes in deferred net revenues		(962		)			(606		)
Non-GAAP Net Revenues by Distribution Channel
Retail channels		513			36		733			45		(220		)	(30	)
Digital online channels(1)		812			57		796			49		16			2
Total Activision and Blizzard		1,325			94		1,529			93		(204		)	(13	)
Distribution		88			6		112			7		(24		)	(21	)
Total non-GAAP net revenues(3)		$	1,413		100	%	$	1,641		100	%	$	(228	)	(14	)%

 

(1) Net revenues from digital online channel represent revenues from subscriptions and memberships, licensing royalties, value-added services, downloadable content, digitally distributed products, and wireless devices.

(2) We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.

(3) Total non-GAAP net revenues presented also represents our total operating segment net revenues.

(4) The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may differ due to the impact of rounding.

 

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