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Activision, Inc. — 2005 Annual Report
page 5
FI S C A L ฀ 2 0 0 5 ฀ W A S ฀A N O T H E R ฀O U T S T A N D I N G ฀Y E A R ฀F O R ฀ A C T I V I S I O N , ฀ M A R K I N G ฀O U R ฀ 1 3 T H ฀C O N S E C U T I V E ฀Y E A R ฀O F ฀R E V E N U E ฀G R O W T H .
OU R ฀N E T ฀R E V E N U E S ฀F O R ฀T H E ฀F I S C A L ฀Y E A R ฀T O T A L E D ฀ $ 1 . 4 ฀ B I L L I O N , ฀ A N ฀I N C R E A S E ฀O F ฀ 4 8 % ฀ O V E R ฀T H E ฀P R I O R ฀F I S C A L ฀Y E A R . ฀ W E฀G R E W ฀
O U R ฀O P E R A T I N G ฀M A R G I N ฀B Y ฀ 1 5 4 ฀ B A S I S ฀P O I N T S , ฀ M A R K I N G ฀O U R ฀F I F T H ฀C O N S E C U T I V E ฀Y E A R ฀O F ฀M A R G I N ฀E X P A N S I O N . ฀ W E฀D E L I V E R E D ฀
7 8 % ฀ G R O W T H ฀I N ฀N E T ฀I N C O M E ฀Y E A R ฀O V E R ฀Y E A R ฀T O ฀A฀R E C O R D ฀ $ 1 3 8 ฀ M I L L I O N , ฀ O R ฀ $ 0 . 6 6 ฀ P E R ฀D I L U T E D ฀S H A R E .
OU R ฀F I N A N C I A L ฀P O S I T I O N ฀H A S ฀N E V E R ฀B E E N ฀S T R O N G E R . ฀ W E฀E N D E D ฀F I S C A L ฀ 2 0 0 5 ฀ W I T H ฀ $ 8 4 1 ฀ M I L L I O N ฀I N ฀C A S H ฀A N D ฀S H O R T -T E R M ฀
I N V E S T M E N T S ฀A N D ฀ $ 1 .1 ฀ B I L L I O N ฀I N ฀S H A R E H O L D E R S ’ ฀ E Q U I T Y , ฀ A N ฀I N C R E A S E ฀O F ฀ $ 2 6 7 ฀ M I L L I O N ฀O V E R ฀T H E ฀P R E V I O U S ฀Y E A R . ฀ O U R ฀
F R E E ฀C A S H ฀F L O W ฀W A S ฀A฀R E C O R D ฀ $ 2 0 0 ฀ M I L L I O N ฀A N D ฀O U R ฀R E T U R N ฀O N ฀I N V E S T E D ฀C A P I T A L ฀W A S ฀ 4 5 % *.
OV E R ฀T H E ฀L A S T ฀F I V E ฀Y E A R S , ฀ T H E ฀C O M P O U N D ฀A N N U A L ฀G R O W T H ฀R A T E ฀O F ฀O U R ฀B O O K ฀V A L U E ฀P E R ฀S H A R E ฀H A S ฀B E E N ฀ 3 7 % . ฀ I F฀Y O U ฀
I N V E S T E D ฀ $ 1 0 0 ฀ I N ฀ A C T I V I S I O N ฀I N ฀ M A R C H ฀O F ฀ 2 0 0 0 , ฀ Y O U R ฀S T A K E ฀W O U L D ฀B E ฀W O R T H ฀ $ 5 5 2 ฀ T O D A Y . ฀ T H I S ฀C O M P A R E S ฀F A V O R A B L Y ฀
T O ฀A฀ $ 1 0 0 ฀ I N V E S T M E N T ฀I N ฀T H E ฀ N A S D A Q ฀ S T O C K ฀ M A R K E T ฀ I N D E X , ฀ W H I C H ฀W O U L D ฀B E ฀W O R T H ฀O N L Y ฀ $ 3 7 ฀ T O D A Y .
WE฀B E L I E V E ฀W E ฀C A N ฀I M P R O V E ฀O U R ฀E A R N I N G S , ฀ E X P A N D ฀O U R ฀O P E R A T I N G ฀M A R G I N ฀A N D ฀C O N T I N U E ฀T O ฀D O ฀T H I S ฀A T ฀A฀H I G H ฀R A T E ฀O F ฀
R E T U R N ฀O N ฀I N V E S T E D ฀C A P I T A L .
To Our Shareholders:
*Free cash flow and return on invested capital are “non-GAAP financial measures.” A reconciliation to the most directly comparable GAAP measures is contained on page 88.
45%
return on invested capital
45%