Blizzard 2005 Annual Report Download - page 43

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Sales and Marketing
(In thousands)
March 31, 2004
% of Consolidated
Net Revenues March 31, 2003
% of Consolidated
Net Revenues Increase/(Decrease) Percent Change
$128,221 14% $100,646 12% $27,575 27%
Sales฀and฀marketing฀expenses฀of฀$128.2฀million฀and฀$100.6฀million฀represented฀14%฀and฀12%฀of฀consolidated฀net฀revenues฀for฀the฀years฀ended฀March฀31,฀2004฀and฀2003,฀
respectively.฀The฀increase฀in฀sales฀and฀marketing฀expense฀dollars฀and฀as฀a฀percentage฀of฀net฀revenues฀for฀the฀year฀ended฀March฀31,฀2004฀from฀the฀prior฀fiscal฀year฀was฀
primarily฀generated฀by฀our฀publishing฀business฀as฀a฀result฀of฀significant฀marketing฀programs,฀including฀television฀and฀in-theatre฀ad฀campaigns฀and฀in-store฀promotions,฀
run฀in฀support฀of฀our฀three฀key฀fiscal฀2004฀third฀quarter฀title฀releases,฀
Tony Hawk’s Underground,
฀and฀our฀two฀new฀original฀properties,฀
True Crime: Streets of L.A.
฀and฀
Call of Duty
.
General and Administrative
(In thousands)
March 31, 2004
% of Consolidated
Net Revenues March 31, 2003
% of Consolidated
Net Revenues Increase/(Decrease) Percent Change
$44,612 5% $46,479 5% $(1,867) (4%)
General฀and฀administrative฀expenses฀for฀the฀year฀ended฀March฀31,฀2004฀decreased฀$1.9฀million฀over฀the฀same฀period฀last฀year,฀from฀$46.5฀million฀to฀$44.6฀million.฀As฀a฀
percentage฀of฀consolidated฀net฀revenues,฀general฀and฀administrative฀expenses฀remained฀constant฀at฀5%.฀The฀decrease฀in฀absolute฀dollars฀was฀primarily฀due฀to:
•฀ ฀Lower฀bad฀debt฀expense฀of฀approximately฀$3.9฀million.
•฀ ฀The฀incurrence฀in฀the฀first฀quarter฀of฀fiscal฀2003฀of฀$1.0฀million฀of฀merger฀related฀expenses฀by฀our฀publishing฀business.
•฀ ฀An฀approximate฀$2.0฀million฀charge฀incurred฀in฀fiscal฀2003฀by฀our฀distribution฀business฀for฀the฀relocation฀of฀our฀UK฀distribution฀facility.
•฀ ฀Partially฀offset฀by฀a฀$5.2฀million฀year-over-year฀increase฀in฀general฀and฀administrative฀employee฀related฀costs฀in฀both฀our฀publishing฀and฀distribution฀businesses.
Operating Income
(In thousands)
March 31,
2004
% of Segment
Net Revs
March 31,
2003
% of Segment
Net Revs
Increase/
(Decrease)
Percent
Change
Publishing $ 93,223 14% $ 79,139 13% $14,084 18%
Distribution 16,594 6 15,708 6 886 6
฀ Consolidated $109,817 12% $ 94,847 11% $14,970 16%
Publishing฀operating฀income฀for฀the฀year฀ended฀March฀31,฀2004฀increased฀$14.1฀million฀from฀the฀same฀period฀last฀year,฀from฀$79.1฀million฀to฀$93.2฀million.฀International฀publishing฀
operating฀income฀for฀the฀year฀ended฀March฀31,฀2004฀benefited฀from฀the฀positive฀impact฀of฀the฀year-over-year฀strengthening฀of฀the฀EUR฀and฀the฀GBP฀in฀relation฀to฀the฀
U.S.฀dollar.฀Excluding฀the฀impact฀of฀changes฀in฀foreign฀currency฀rates,฀publishing฀operating฀income฀for฀the฀year฀ended฀March฀31,฀2004฀increased฀approximately฀$7.8฀million฀
from฀the฀same฀period฀last฀year.฀This฀increase฀is฀primarily฀due฀to:
•฀ ฀Strong฀performance฀in฀both฀the฀North฀America฀and฀international฀markets฀of฀our฀fiscal฀2004฀third฀quarter฀title฀releases.
Partially฀offset฀by:
•฀ ฀Increased฀sales฀and฀marketing฀spending.
•฀ ฀The฀product฀development฀charge฀recorded฀in฀the฀fiscal฀2004฀third฀quarter฀in฀connection฀with฀the฀cancellation฀of฀ten฀products.
page 41
Activision, Inc. — 2005 Annual Report