Blizzard 2008 Annual Report Download - page 27

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13
Annual Highlights
Operating Highlights (amounts in millions)
For the years ended December 31,
2008 2007 2006
Increase/
(decrease)
2008 v 2007
Increase/
(decrease)
2007 v 2006
(as adjusted)
Net revenues:
Activision........................................................................................ $2,152 $272 $360 $1,880 $(88)
Blizzard........................................................................................... 1,343 1,107 638 236 469
Distribution..................................................................................... 227 — — 227 —
Activision Blizzard’s core operations................................................. 3,722 1,379 998 2,343 381
Activision Blizzard’s non-core exit operations............................... 17 10 3 7 7
Operating segments total .................................................................... 3,739 1,389 1,001 2,350 388
Reconciliation to consolidated net revenues:
Net effect from deferred net revenues............................................. (713) (40) 17 (673) (57)
Consolidated net revenues .................................................................. $3,026 $1,349 $1,018 $1,677 $331
Segment income (loss) from operations:
Activision........................................................................................ $307 $(13) $(22) $320 $9
Blizzard........................................................................................... 704 568 321 136 247
Distribution..................................................................................... 22 — — 22 —
Activision Blizzard’s core operations................................................. 1,033 555 299 478 256
Activision Blizzard’s non-core exit operations............................... (266) (198) (136) (68) (62)
Operating segments total .................................................................... 767 357 163 410 194
Reconciliation to consolidated operating income (loss):
Net effect from deferred net revenues and related costs of sales.... (496) (38) 14 (458) (52)
Stock-based compensation expense................................................ (90) (137) (48) 47 (89)
Restructuring expense..................................................................... (93) 1 (4) (94) 5
Amortization of intangible assets and purchase price accounting
related adjustments ..................................................................... (292) (4) (4) (288) —
Integration and transaction costs..................................................... (29) — — (29) —
Total consolidated operating income (loss) ........................................ $(233) $179 $121 $(412) $58
Each of our segments’ net revenues increased for the year ended December 31, 2008,
compared to the same period in 2007. In North America, Activision Blizzard was the #1 console
and hand-held software publisher in dollars for the quarter ended December 31, 2008, according to
The NPD Group. Blizzard’s net revenues also increased for the year ended December 31, 2007,
compared to the same period in 2006. The increases in 2008 and 2007 were mainly attributable to:
• The consummation of the Business Combination, which resulted in segments’
revenues from Activision, Inc. of approximately $2,215 million, of which
$227 million relates to Distribution segment, being included from the date of the
Business Combination but not for prior periods;
• Continued growth in the video game industry, despite a difficult macroeconomic and
retail environment which improved our sales revenues in 2008 compared to the same
periods in 2007 and 2006;