Blizzard 2002 Annual Report Download

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Activision
’02
>> ANNUAL REPORT
Medieval: Total War
Spider-Man姠
Blade姠II
Street Hoops姠
Bloody Roar姠3
Stuart Little姠
Medieval: Total War姠
X-Men姠Next Dimension姠
Lost Kingdoms姠
Mat Hoffman’s Pro BMX姠2
Bomberman姠Tournament
Bloody Roar姠: Primal Fury
Cabela’s Big Game Hunter姠
Minority Report姠
Kelly Slater’s Pro Surfer姞
Mat Hoffman’s Pro BMX姠
Medieval: Total War姠
Spider-Man姠: Mysterio’s Menace姠
Pinobee: Wings of Adventure姠
Star Trek姞Star Fleet Command III姠
Rally Fusion姠: Race of Champions姠
Return to Castle Wolfenstein姠
X-Men姠Mutant Academy姠2
Star Trek姞Elite Force II姠
Shaun Murrary’s Pro Wakeboarder姠
Soldier of Fortune姞II: Double Helix姠
Spider-Man姠2: Enter: Electro姠
Shaun Palmer’s Pro Snowboarder姠
Bomberman姠Tournament
Kelly Slater’s Pro Surfer姞
Star Trek姞: Armada II姠
Spider-Man姠: Mysterio’s Menace姠
Return to Castle Wolfenstein姠: Game of the Year姠
Star Trek姞Bridge Commander姠
Tony Hawk’s Pro Skater姠4
Star Trek姞Elite Force II姠
Stuart Little姠
Disney’s Tarzan姠: Return to the Jungle
Tenchu姠3: Wrath of Heaven姠
X-Men姠Wolverine’s姠Revenge
Star Trek姞Star Fleet Command III姠
World’s Scariest Police Chases姠
True Crime姠: Streets of L.A.姠
Tony Hawk’s Pro Skater姠3
X-Men姠: Reign of Apocalypse姠
Travis Pastarana’s Pro MotoX姠
Mat Hoffman’s Pro BMX姠2
Tony Hawk’s Pro Skater姠4
Star Trek姞: Armada II姠
where the action is
Travis Pastarana’s Pro MotoX姠
X-Men姠Mutant Academy姠2
Kelly Slater’s Pro Surfer姞
Shaun Murrary’s Pro Wakeboarder姠
Soldier of Fortune姞II: Double Helix姠
Spider-Man姠2: Enter: Electro姠
Shaun Palmer’s Pro Snowboarder姠
Wreckless: The Yakuza Missions姠
Spider-Man姠: Mysterio’s Menace姠
Return to Castle Wolfenstein姠: Game of the Year姠
Star Trek姞Bridge Commander姠
Tony Hawk’s Pro Skater姠4
Star Trek姞Elite Force II姠
Stuart Little 2姠
Disney’s Tarzan姠: Return to the Jungle
Tenchu姠3: Wrath of Heaven姠
X-Men姠Wolverine’s姠Revenge
Star Trek姞Star Fleet Command III姠
X-Men姠Next Dimension姠
Lost Kingdoms姠
Mat Hoffman’s Pro BMX姠2
Bomberman姠Tournament
Minority Report姠
XXX姠
Blade姠II
Spider-Man姠
Street Hoops姠
Bloody Roar姠3
Stuart Little姠
Spider-Man姠
Street Hoops姠
Stuart Little 2姠
Mat Hoffman’s Pro BMX姠
Kelly Slater’s Pro Surfer姞
Medieval: Total War姠
Spider-Man姠: Mysterio’s Menace姠
Pinobee: Wings of Adventure姠
Star Trek姞Star Fleet Command III姠
Rally Fusion姠: Race of Champions姠
Return to Castle Wolfenstein姠
X-Men姠Mutant Academy姠2
Tony Hawk’s Pro Skater姠3
X-Men姠: Reign of Apocalypse姠
Travis Pastarana’s Pro MotoX姠
True Crime姠: Streets of L.A.姠
World’s Scariest Police Chases姠
Wreckless: The Yakuza Missions姠
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Table of contents

  • Page 1
    ... Primal Fury Cabela's Big Game Hunter ீ Minority Report ீ Kelly Slater's Pro Surfer ா Mat Hoffman's Pro BMX ீ Medieval: Total War ீ Spider-Man ீ: Mysterio's Menace ீ Pinobee: Wings of Adventure ீ Star Trek ா Star Fleet Command III ீ Rally Fusion ீ : Race of Champions ீ Return...

  • Page 2
    ... U.S. Publisher Video Game Franchise - Tony Hawk Action Sports Market Share Nintendo Publisher - All Platforms Fiscal year 2002 was one of the best years in Activision's history. With a portfolio of some of the strongest franchises in interactive entertainment and a management team unified...

  • Page 3
    ...Officer Brian G. Kelly Co-Chairman Powerful >>> Continuing as a Global Leader: For more than 20 years, Activision has been revolutionizing video games. We were the first independent video game developer and publisher and introduced several of the brands that forged the industry's success. Today...

  • Page 4
    ...based on Columbia Pictures/Marvel Entertainment's blockbuster feature film. On April 16, 2002, Activision shipped more than one million units of the Spider-Man game to North American retail outlets, making it the largest one-day launch in the company's history. The high-flying, web-slinging title is...

  • Page 5
    ..., Activision released id Software's Return to Castle Wolfenstein௣ , which has shipped more than one million units and topped retail sell-through charts during the holiday season in the U.S., U.K. and Germany. In the upcoming fiscal year, Activision will release a number of new and exciting games...

  • Page 6
    ... production progressing according to budget, schedule, and quality? Purpose: Is the game being completed in a timely manner consistent with creative and technical goals? Deliverables: • Alpha version of game • Trade marketing plan summary • Final packaging/rough TV boards • Revised product...

  • Page 7
    ... our global leadership for years to come. >>> Financial Review • Net revenues Cost of sales-product costs Cost of sales-intellectual property licenses and software royalties and amortization Income (loss) from operations Income (loss) before income tax provision Net income (loss) Basic earnings...

  • Page 8
    ... license or through our affiliate label program with third party publishers. In the United States, our products are sold primarily on a direct basis to major computer and software retailing organizations, mass market retailers, consumer electronic stores, discount warehouses and mail order companies...

  • Page 9
    ... segment and our distribution segment. Net revenues Costs and expenses: Cost of sales-product costs Cost of sales-intellectual property licenses Cost of sales-software royalties and amortization Product development Sales and marketing General and administrative Amortization of intangibles Total...

  • Page 10
    ... 2000, we finalized a strategic restructuring plan to accelerate the development and sale of interactive entertainment products for the next-generation consoles and the Internet. Costs associated with this plan amounted to $70.2 million, approximately $61.8 million net of taxes, and were recorded in...

  • Page 11
    ... console net revenue mix. Distribution products have a higher per unit product cost than publishing products, and console products have a higher per unit product cost than PC products. Cost of sales-intellectual proper ty licenses and cost of sales-software royalties and amor tization, combined...

  • Page 12
    ... favorable operating results, tax benefits from stock option and warrant exercises and reductions in inventory levels, partially offset by our continued investment in software development and intellectual property licenses. Approximately $77.0 million was utilized in fiscal 2002 in connection with...

  • Page 13
    ... May 2001, we repaid in full the remaining $8.5 million balance of the term loan portion of the U.S. Facility. As such, as of March 31, 2002, we had no variable rate debt and no material fixed rate debt outstanding. Foreign Currency Exchange Rate Risk. We transact business in many different foreign...

  • Page 14
    ... at March 31, 2002 and 2001, respectively Inventories Software development Intellectual property licenses Deferred income taxes Other current assets Total current assets Software development Intellectual property licenses Property and equipment, net Deferred income taxes Other assets Goodwill Total...

  • Page 15
    ...2000 For the years ended March 31, Cash flows from operating activities: 2002 2001 2000 Net revenues Costs and expenses: Cost of sales-product costs Cost of sales-intellectual property licenses Cost of sales-software royalties and amortization Product development Sales and marketing General and...

  • Page 16
    ...to employees Tax benefit attributable to employee stock options and common stock warrants Tax benefit derived from net operating loss carryforward utilization Purchase of treasury shares Balance, March 31, 2001 Components of comprehensive income: Net income for the year Foreign currency translation...

  • Page 17
    ...using the cost method. Software Development Costs and Intellectual Property Licenses. Software development costs include payments made to independent software developers under development agreements as well as direct costs incurred for the internal development of products. Delaware corporation, and...

  • Page 18
    ...software development costs and intellectual proper ty licenses was $62.5 million, $68.9 million and $78.7 million for the year ended March 31, 2002, 2001 and 2000, respectively. Inventories. Inventories are valued at the lower of cost (first-in, first-out) or market. Property and Equipment. Property...

  • Page 19
    ... date and is capitalized, expensed and amortized consistent with our policies relating to software development and intellectual property license costs. Related Parties. As of March 31, 2002 and 2001, we had $3.1 million and $4.3 million, respectively, of loans Additional shares of our common stock...

  • Page 20
    ... 2000, we finalized a strategic restructuring plan to accelerate the development and sale of interactive entertainment products for the next-generation consoles and the Internet. Costs associated with this plan amounted to $70.2 million, approximately $61.8 million net of taxes, and were recorded in...

  • Page 21
    ... license or through our affiliate label program with third party publishers. In the United States, our products are sold primarily on a direct basis to major computer and software retailing organizations, mass market retailers, consumer electronic stores, discount warehouses and mail order companies...

  • Page 22
    ...$12,037 The items accounting for the difference between income taxes computed at the U.S. federal statutory income tax rate and the income tax provision for each of the years are as follows: Year ended March 31, 2002 2001 2000 Bank Lines of Credit and Other Debt. Our long-term debt consists of the...

  • Page 23
    ... awards, deferred stock awards and other common stock-based awards to directors, officers, employees, consultants and others. The total number of shares of common stock available for distribution under the 1998 Plan is 4,500,000. The 1998 Plan requires available shares to consist in whole or in part...

  • Page 24
    ..., 2002 (share amounts in thousands): Outstanding Options Remaining Wtd. Avg. Contractual Life (in years) Exercisable Options matic granting of warrants ("Director Warrants") to purchase 25,000 shares of common stock to each director of Activision who was not an officer or employee of Activision or...

  • Page 25
    ...,000 shares of our common stock at an exercise price of $7.75 per share in connection with, and as partial consideration for, a license agreement that allows us to utilize the third party's name in conjunction with certain Activision products. The warrants vested upon grant, have a seven-year term...

  • Page 26
    ... period or 85% of the fair market value on the date of purchase. In general, employees may purchase shares using amounts (up to 15%) of their compensation that is withheld by us, subject to an aggregate annual limitation of $25,000 per calendar year. The 2002 ESPP will be put before our shareholders...

  • Page 27
    ... Los Angeles, California Corporate Counsel On June 18, 2002, the last reported sales price of our common stock was $29.59. Dividends The statements contained in this report that are not historical facts are "forwardlooking statements." The company cautions readers of this report that a number of...

  • Page 28
    3100 Ocean Park Boulevard Santa Monica, CA 90405 phone: (310) 255-2000 fax: (310) 255-2100 www.activision.com